Bank Concentration and Structure of Manufacturing Sectors: Differences Between High and Low Income Countries

This paper investigates the relationship between bank concentration and the real economy by analyzing the number and average size of firms in manufacturing industries in two samples of countries with differing levels of economic development. We use a panel of 42 countries and 27 manufacturing industries for the period 1993-2001, and we apply the Rajan-Zingales (1998) methodology. The main finding is that in developed countries higher levels of bank concentration are associated with lower number of firms, of bigger size, while in developing countries this relationship does not seem to be significant.