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Bank Market Power, Firm Performance, Financing Costs and Capital Structure

2024-01-17Journal article Open access
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dc.contributor.authorGonçalves, Marisa Pessoa
dc.contributor.authorReis, Pedro
dc.contributor.authorPinto, Pedro
dc.date.accessioned2024-06-04T10:43:33Z
dc.date.available2024-06-04T10:43:33Z
dc.date.issued2024-01-17
dc.description.abstractIn this study, we provide a thorough analysis, conducted on a company-by-company basis, of the impact of bank concentration and the bank-relative power of banks on firm profitability, financing costs, and capital structure in a small economy like Portugal. Using a sample of 434,990 Portuguese companies, the study spans a time frame of 13 years (from 2006 to 2018). Principal component analysis (PCA) was used to determine bank concentration, and a new variable, “bank-related power”,was introduced. This work employed linear regression with static panel data for fixed and pooled effects, using Driscoll–Kraay standard errors and robust standard error estimation. A direct associ ation was found between business performance and the use of bank credit in highly concentrated banking markets (SMEs), and there is evidence of an inverse relationship when the relative power of banks increases (small business). Evidence also shows that financing costs increase with greater bank concentration, while firms’ capital structure improves under similar conditions. When a bank holds greater relative market power, it tends to exert a negative impact on the capital structure of large companies. However, an inverse relationship is observed in the case of SMEs. Unlike previous studies, the article assesses the effects of bank market power on each of the different companies involved by using both bank concentration (as a composite variable) and a new variable that measures the relative power of banks. Due to its extensive database and expanded time frame, this research is innovative in the context of small-sized companies.pt_PT
dc.description.versioninfo:eu-repo/semantics/publishedVersionpt_PT
dc.identifier.citationGonçalves, Marisa Pessoa, Pedro M. Nogueira Reis, and António Pedro Pinto. 2024. Bank Market Power, Firm Performance, Financing Costs and Capital Structure. International Journal of Financial Studies 12: 7. https://doi.org/10.3390/ ijfs12010007pt_PT
dc.identifier.doi10.3390/ijfs12010007pt_PT
dc.identifier.urihttp://hdl.handle.net/10400.19/8412
dc.language.isoengpt_PT
dc.peerreviewedyespt_PT
dc.relationUIDB/05583/2020pt_PT
dc.relationFurthermore, we would like to thank the Banco de Portugal Microdata Research Laboratory—BPLIM: Project ID: SE_P097pt_PT
dc.subjectbank market powerpt_PT
dc.subjectbank concentrationpt_PT
dc.subjectrelative power of bankspt_PT
dc.subjectperformancept_PT
dc.subjectfinancing costspt_PT
dc.subjectcapital structurept_PT
dc.titleBank Market Power, Firm Performance, Financing Costs and Capital Structurept_PT
dc.typejournal article
dspace.entity.typePublication
oaire.citation.issue1pt_PT
oaire.citation.startPage7pt_PT
oaire.citation.titleInternational Journal of Financial Studiespt_PT
oaire.citation.volume12pt_PT
person.familyNameReis
person.familyNameMelo Pinto
person.givenNamePedro
person.givenNamePedro
person.identifier.ciencia-idB71F-60A3-3FB5
person.identifier.ciencia-id9011-BFDC-7EDC
person.identifier.orcid0000-0003-1301-6645
person.identifier.orcid0000-0001-8257-0143
person.identifier.ridN-9211-2018
person.identifier.scopus-author-id56747454000
rcaap.rightsopenAccesspt_PT
rcaap.typearticlept_PT
relation.isAuthorOfPublication84bd8fcc-7ce1-49f7-9669-9ccf9b9ce2f0
relation.isAuthorOfPublicationc6a6bfcb-57ac-4e09-a415-9834c938a2ab
relation.isAuthorOfPublication.latestForDiscoveryc6a6bfcb-57ac-4e09-a415-9834c938a2ab

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