The Survey of the Causal Relationship between Banking Concentration and Economic Growth

This paper examines the causality between concentration in banking industry and economic growth by using data across ۱۵ countries named in "Iran outlook in ۲۰۲۵", over the period ۲۰۰۴-۲۰۱۱. Our aim is to assess whether the economy grows more or less rapidly in areas where the banking sector is more concentrated. The topic is motivated by the fact that the causality between concentration in banking industry and economic growth has not been examined in Iran and the countries named in Iran Outlook ۲۰۲۵. In order to investigate the relationship, the standard Granger causality test and Hsiao’s version of Granger causality test are employed in this paper. The results show that banking concentration is negatively associated with economic growth. Besides, the evidence suggests that economic growth has a positive effect on bank monopoly power.

Keywords:

Banking Structure , economic growth , Countries of Iran’s Prospective District