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The stability-concentration relationship in the Brazilian banking system

Author

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  • Chang, E.J.
  • Guerra, S.M.
  • Lima, E.J.A.
  • Tabak, B.M.

Abstract

In this article, the relation between non-performing loans (NPL) of the Brazilian banking system and macroeconomic factors, systemic risk, and banking concentration is empirically tested. In evaluating this relation, we use a dynamic specification with fixed effects, while using a panel data approach. The empirical results suggest that the banking concentration has a statistically significant impact on NPL, suggesting that more concentrated banking systems may improve financial stability. These results are important for the design of banking regulation policies.

Suggested Citation

  • Chang, E.J. & Guerra, S.M. & Lima, E.J.A. & Tabak, B.M., 2008. "The stability-concentration relationship in the Brazilian banking system," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 18(4), pages 388-397, October.
    • Handle: RePEc:eee:intfin:v:18:y:2008:i:4:p:388-397
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