BANK CONCENTRATION AND FINANCING OBSTACLE: EVIDENCE FROM DEVELOPING AND EMERGING MARKETS

The banking system is regarded as a mechanism that can covert the impact of the financialmarket development into growth. The amount of credit that the banking sector makes availablefor productive uses is one of the most significant measures of financial development.Our paper tests the importance of banking competition for firms’ access to finance following theoriginal contribution by Thorsten, Asly and Vojislav (2004) for a cross-section of 22 emergingand developing countries. By conducting the regression test with new period of data, we try toexplore how banking competition after financial crisis impact firms access to credit, especially inthe developing and emerging countries.Through regression, we conclude that with more bank concentration firms face fewer financingobstacles, and large enterprises can access credit easier than small and medium enterprises. Our results provide evidence for theories that focus on the potential positive effects of bankconcentration which is inconsistent with theories that stress the negative effects of bank power.