6. Conclusion
Our regression results suggest that a more concentrated banking sector is likely to increase unemployment in developing countries. The magnitude of the effect appears to be substantial. Our results are robust to both endogeneity of „bank concentration‟ and numerous variations in specification. Although our results are both robust and in line with many previous papers – particularly, with our companion paper covering industrial countries – more research is clearly warranted, both theoretical and empirical. Most importantly, as noted in the previous section, the transmission channels from banking system concentration to unemployment need to be more closely analyzed. Furthermore, future cross-country studies should use alternative measures of concentration and larger samples of countries. Case studies of individual countries closely tracking the evolution of bank concentration, labor market performance and the links between the two would also be welcome.
