Are Bigger Banks Better? Firm-Level Evidence from Germany - Kilian Huber

Finance

Speaker : Kilian Huber

Videoconference

I investigate how increases in bank size affect real outcomes by studying two quasi-experiments from postwar Germany. Exogenous increases in bank size did not raise the growth of firms or municipalities. Bigger banks did not become more profitable or cost efficient but took more risks. The findings imply that bigger banks do not always raise the growth of firms and can actually harm some borrowers.