Bank Concentration, Corporate Savings and Current Account Imbalances
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| Title | Bank Concentration, Corporate Savings and Current Account Imbalances
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| Author | Zhibo Tan and Yue Zhao |
| Organization | National School of Development, Peking University |
| Email | tzb0905@pku.edu.cn,bettyyue@pku.edu.cn |
| Key Words | Bank Concentration; Corporate Savings; Bank Financing; Current Account Imbalances |
| Abstract | Based on the national level panel data about 56 countries in the period of 1990 to 2007 and a World Bank survey dataset about firms' financing behaviors in 1999, this paper investigates the relationship among bank concentration, corporate savings and current account imbalances with the utilization of dynamic panel models and Tobit models. The empirical results show that the more concentrated the banking sector is, the less the proportion of firms' bank financing and the more their retained earnings are. Furthermore, savings by corporate sector is significantly correlated with current account imbalances and the high savings in countries with a more concentrated banking sector lead to larger current account surplus or less current account deficits in these countries. Our results remain robust with the consideration of financial center effect and IV regressions. Differing from traditional measurement of financial development which focuses on the overall scale of financial sector, our results highlight the importance of internal structure of banking sector in the understanding of current account imbalances. |
| Serial Number | WP294 |
| Time | 2012-07-13 |
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