Cookies?
Library Header Image
LSE Research Online LSE Library Services

Are bigger banks better?: firm level evidence from Germany

Huber, Kilian (2020) Are bigger banks better?: firm level evidence from Germany. CEP Discussion Papers (1735). Centre for Economic Performance, London School of Economics and Political Science, London, UK.

[img] Text (dp1735) - Published Version
Download (2MB)

Abstract

The effects of large banks on the real economy are theoretically ambiguous and politically controversial. I identify quasi-exogenous increases in bank size in post-war Germany. I show that firms did not grow faster after their relationship banks became bigger. In fact, opaque borrowers grew more slowly. The enlarged banks did not increase profits or efficiency, but worked with riskier borrowers. Bank managers benefited through higher salaries and media attention. The paper presents newly digitized microdata on German firms and their banks. Overall, the findings reveal that bigger banks do not always raise real growth and can actually harm some borrowers.

Item Type: Monograph (Discussion Paper)
Official URL: https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information: © 2020 The Authors
Divisions: LSE
Subjects: H Social Sciences > HG Finance
H Social Sciences > HC Economic History and Conditions
JEL classification: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E24 - Macroeconomics: Employment; Unemployment; Wages; Intergenerational Income Distribution (includes wage indexation)
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation
Date Deposited: 19 Jan 2021 15:57
Last Modified: 26 Apr 2021 12:09
URI: http://eprints.lse.ac.uk/id/eprint/108497

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year

View more statistics