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Does Banking Sector Structure Affect Bank Lending and Its Sensitivity to Capital Ratio? A Cross-country Study

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Abstract

Does the banking sector’s structure affect bank lending and its sensitivity to the capital ratio? Looking at banks operating in over 60 countries in the years 2000–2011, this chapter aims to resolve this puzzle. Its goal is also to find out whether country development and capital account openness, and inclusion in the Central and Eastern Europe (CEE) region explain the potential diversity of the banking sector structure and lending nexus. To resolve this problem we apply a two-step generalized method of moments (GMM) robust estimator. We find that an increase in concentration of the banking sector results in reduced bank lending and that concentration seems to affect the link between lending and the capital ratio. This effect is particularly strong in CEE.

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Notes

  1. 1.

    All countries included in the research: Australia, Austria, Belgium, Bulgaria, Canada, China, Colombia, Croatia, Cyprus, the Czech Republic., Denmark, Ecuador, Salvador, Estonia, Finland, France, Germany, Ghana, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Jordan, Kazakhstan, Kenya, Korea, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Morocco, the Netherlands, New Zealand, Nigeria, Norway, Pakistan, Panama, Peru, Philippines, Poland, Portugal, Romania, Russia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Thailand, Tunisia, Turkey, Uganda, Ukraine, UK, USA.

  2. 2.

    This group is: Bulgaria, Republic of China, Colombia, Croatia, Ecuador, Salvador, Hungary, India, Indonesia, Jamaica, Jordan, Kazakhstan, Lithuania, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Romania, Russia, South Africa, Sri Lanka, Thailand, Tunisia, Turkey, Ukraine.

  3. 3.

    This group is: Australia, Austria, Belgium, Canada, Cyprus, the Czech Republic, Estonia, Finland, France, Germany, Hong Kong, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Malta, the Netherlands, New Zealand, Norway, Portugal, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, UK, USA.

  4. 4.

    This group is: Australia, Austria, Belgium, Bulgaria, Canada, Cyprus, Estonia, Finland, France, Germany, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Jamaica, Japan, Jordan, Latvia, Malaysia, Malta, theNetherlands, New Zealand, Norway, Portugal, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, UK, USA.

  5. 5.

    This group is: Republic of China, Colombia, Croatia, the Czech Republic, Ecuador, Salvador, Ghana, India, Indonesia, Kazakhstan, Kenya, Korea, Lithuania, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Romania, Russia, South Africa, Sri Lanka, Thailand, Tunisia, Turkey, Uganda, Ukraine.

  6. 6.

    This group is: Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia, Slovakia, Slovenia, Ukraine.

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Authors and Affiliations

  1. Faculty of Management, University of Warsaw, Szturmowa 1/3, 02-678,, Warszawa, Poland

    Iwona Kowalska, Małgorzata Olszak & Filip Świtała

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  1. Iwona Kowalska
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  2. Małgorzata Olszak
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  3. Filip Świtała
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Correspondence to Małgorzata Olszak .

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  1. c/o EBES, Cracow University of Economics, Fatih, Istanbul, Turkey

    Ewa Miklaszewska

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Kowalska, I., Olszak, M., Świtała, F. (2017). Does Banking Sector Structure Affect Bank Lending and Its Sensitivity to Capital Ratio? A Cross-country Study. In: Miklaszewska, E. (eds) Institutional Diversity in Banking. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-42073-8_7

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  • DOI: https://doi.org/10.1007/978-3-319-42073-8_7

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