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Bank competition and crises revisited: New results

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  • Diallo, Boubacar

Abstract

We study the relationship between bank competition and stability for 145 countries over the period 1997–2010. We use three measures of bank competition, namely the Boone indicator, the Lerner and the adjusted Lerner indices, and two econometric methods. Our results show that bank competition is detrimental to bank stability, and it also shortens the survival time of banking systems.

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  • Diallo, Boubacar, 2015. "Bank competition and crises revisited: New results," Economics Letters, Elsevier, vol. 129(C), pages 81-86.
    • Handle: RePEc:eee:ecolet:v:129:y:2015:i:c:p:81-86
    DOI: 10.1016/j.econlet.2015.02.015
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    Cited by:

    1. Fiordelisi, Franco & Mare, Davide Salvatore & Molyneux, Philip, 2015. "State-Aid, Stability and Competition in European Banking," MPRA Paper 67473, University Library of Munich, Germany.
    2. Blanco-Oliver, Antonio, 2021. "Banking reforms and bank efficiency: Evidence for the collapse of Spanish savings banks," International Review of Economics & Finance, Elsevier, vol. 74(C), pages 334-347.
    3. Samangi Bandaranayake & Kuntal Das & W. Robert Reed, 2017. "A Replication of “Are Competitive Banking Systems More Stable?” (Journal of Money, Credit, and Banking, 2009)," Working Papers in Economics 17/01, University of Canterbury, Department of Economics and Finance.
    4. João Amador & Ana Cristina Soares, 2018. "Competition in the Portuguese economy: insights from a profit elasticity approach," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 45(2), pages 339-365, May.
    5. Samangi Bandaranayake & Kuntal K. Das & Robert W. Reed, 2020. "Another Look At ‘Bank Competition And Financial Stability: Much Ado About Nothing’?," Journal of Economic Surveys, Wiley Blackwell, vol. 34(2), pages 344-371, April.
    6. van Leuvensteijn, Michiel & Huljak, Ivan & de Bondt, Gabe, 2024. "A new measure of firm-level competition: an application to euro area banks," Working Paper Series 2925, European Central Bank.
    7. Samangi Bandaranayake & Kuntal K. Das & W. Robert Reed, 2018. "A Replication of “Bank Competition and Financial Stability: Much Ado About Nothing?” (Journal of Economic Surveys, 2016)," Working Papers in Economics 18/18, University of Canterbury, Department of Economics and Finance.
    8. Changjun Zheng & Mohammed Mizanur Rahman & Munni Begum & Badar Nadeem Ashraf, 2017. "Capital Regulation, the Cost of Financial Intermediation and Bank Profitability: Evidence from Bangladesh," JRFM, MDPI, vol. 10(2), pages 1-24, April.
    9. Badarau, Cristina & Lapteacru, Ion, 2020. "Bank risk, competition and bank connectedness with firms: A literature review," Research in International Business and Finance, Elsevier, vol. 51(C).
    10. Kęstutis Peleckis, 2021. "Application of the DEMATEL Model for Assessing IT Sector’s Sustainability," Sustainability, MDPI, vol. 13(24), pages 1-14, December.
    11. Maghyereh, Aktham I., 2018. "Bank Competition, Concentration and Risk-taking in the UAE Banking Industry," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 71(2), pages 129-148.
    12. Juan Carlos CUESTAS & Yannick LUCOTTE & Nicolas REIGL, 2019. "Banking sector concentration, competition and financial stability: the case of the Baltic countries," LEO Working Papers / DR LEO 2731, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    13. Diallo, Boubacar & Al-Mansour, Abdullah, 2017. "Shadow banking, insurance and financial sector stability," Research in International Business and Finance, Elsevier, vol. 42(C), pages 224-232.
    14. Richter Toni, 2021. "Bankenwettbewerb und die Stabilität von Finanzsektoren: Nur eine Frage der Messmethode?," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 70(1), pages 1-36, May.
    15. Siddharth Jain & Partha Gangopadhyay, 2020. "Impacts of Endogenous Sunk-Cost Investment on the Islamic Banking Industry: A Historical Analysis," JRFM, MDPI, vol. 13(6), pages 1-23, May.
    16. Hirofumi Fukuyama & Yong Tan, 2023. "Estimating market power under a nonparametric analysis: evidence from the Chinese real estate sector," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 45(2), pages 599-622, June.
    17. Cuestas, Juan Carlos & Lucotte, Yannick & Reigl, Nicolas, 2017. "Banking sector concentration, competition and financial stability: the case of the Baltic countries," Bank of Estonia Working Papers wp2017-7, Bank of Estonia, revised 11 Sep 2017.
    18. Elfeituri, Hatem, 2022. "Banking stability, institutional quality, market concentration, competition and political conflict in MENA," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 76(C).
    19. Akbar, Syed Waqar & Rehman, Ajid Ur & Bouri, Elie & Ijaz, Muhammad Shahzad & Arshad, Imran, 2024. "Socio-economic issues and bank stability: The moderating role of competition," Research in International Business and Finance, Elsevier, vol. 71(C).

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    More about this item

    Keywords

    Bank competition; Bank concentration; Financial reforms; Banking system fragility;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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