Does Bank Performance Contribute to Economic Growth in the European Union?

This paper uses dynamic GMM panel estimates to analyse the effects of the bank market structure and performance of banking institutions on economic growth in the European Union. The findings confirm the specific and not unanimous influence of bank market structure on economic growth. As to bank performance the results are very clear and statistically significant: the increase of the ratio equity to total assets contributes to the decrease of economic growth. Simultaneously, bank efficiency clearly contributes positively to economic growth, confirming the assumption that well-functioning banks are at least a necessary condition to the increase of the national income.