Bank competition and unemployment

Dong Hyeon Kim, Ting Cih Chen, Shu Chin Lin

Research output: Contribution to journalArticlepeer-review

Abstract

Much effort has been devoted to exploring the effect of bank competition on economic growth and stability. This paper shifts the focus towards the unemployment outcome. Using the Boone and Lerner indicators as well as bank concentration ratios, it finds, in a panel of developing and developed countries, that unemployment declines with bank competition up to a certain level of bank competition, above which it rises with bank competition. The impact seems to operate through investment and self-employment. The data thus suggest that there exists an optimal bank competition level that minimizes unemployment and too less and too much competition in a banking sector is detrimental to unemployment as it impedes capital accumulation and entrepreneurship development.

Original languageEnglish
Pages (from-to)2024-2037
Number of pages14
JournalApplied Economics
Volume55
Issue number18
DOIs
Publication statusPublished - 2023

Bibliographical note

Funding Information:
This work was supported by a Korea University Grant We are grateful to four anonymous referees for their comments and suggestions that greatly improve the paper.

Publisher Copyright:
© 2022 Informa UK Limited, trading as Taylor & Francis Group.

Keywords

  • Unemployment
  • bank competition
  • bank concentration
  • employment

ASJC Scopus subject areas

  • Economics and Econometrics

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