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Bank competition, financial dependence, and economic growth in the Gulf Cooperation Council

This paper investigates the impact of bank competition on industry growth in the Gulf Cooperation Council economies. The results show that greater competition allows financially dependent firms to grow faster. In addition, the results show that lower restrictions on banks’ permissible activities, better credit information, and greater institutional effectiveness mitigate the damaging impact of low competition. The findings suggest that improving bank competition should be an important aspect of the financial sector development agenda in the Gulf Cooperation Council.