Cover IMF Working Papers
Bank Competition and Firm Creation
Author:
Mr. Giovanni Dell'Ariccia
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Series:
IMF Working Papers
Volume/Issue:
Volume 2001: Issue 021
Language:
English
Publication Date:
01 Feb 2001
DOI:
https://doi.org/10.5089/9781451843910.001
ISBN:
9781451843910
ISSN:
1018-5941
Pages:
39
Keywords:
WP; bank competition; registered firm; birth rate; birth of firm; banking industry; company balance sheets; Competition; Credit; Bank credit; Commercial banks; Moral hazard
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper investigates the empirical relationship between competition in the financial sector and the creation of firms in the non-financial sector. It finds that bank competition has an overall positive effect on firm creation. However, consistent with theories of banking arguing that competition may reduce the availability of credit to informationally opaque firms, it also finds that asymmetric information limits the overall positive effect of bank competition on firm creation. Indeed, bank competition is less favorable to the emergence of new firms in industrial sectors where informational asymmetries are more important, and in extreme cases has a negative effect.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2001: Issue 021