Abstract
Evidence shows that GDP declines to positive bank concentration shocks. In addition, evidence from the counterfactual analysis shows that actual GDP declines more than the counterfactual suggests. The decline is accentuated by the slowdown in investment, reduction in employment, increased unemployment and reduced credit growth due to the unexpected increase in bank concentration. Therefore, it is important for policymakers to lower the entry barriers and introduce a sliding scale of capital adequacy ratios that rise with the size of the banks.
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Notes
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These small firms create most of the new jobs while the older and larger firms create few and destroy many jobs. As a consequence, a concentrated banking sector may lower employment and raise unemployment, especially by focusing on the latter type of firms.
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Ndou, E., Mokoena, T. (2019). Do Positive Bank Concentration Shocks Impact Economic Growth in South Africa?. In: Inequality, Output-Inflation Trade-Off and Economic Policy Uncertainty . Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-19803-9_17
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DOI: https://doi.org/10.1007/978-3-030-19803-9_17
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Publisher Name: Palgrave Macmillan, Cham
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