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Financial Crises, Concentration and Efficiency: Effects on Performance and Risk of Banks

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  • Sergio SANFILIPPO AZOFRA

    (University of Cantabria, Business Administration Faculty, Spain)

  • Maria CANTERO SAIZ

    (University of Cantabria, Business Administration Faculty, Spain)

  • Begona TORRE OLMO

    (University of Cantabria, Business Administration Faculty, Spain)

  • Carlos LOPEZ GUTIERREZ

    (University of Cantabria, Business Administration Faculty, Spain)

Abstract

This paper analyzes the changes that financial crises cause in the relationship between bank market share, efficiency and profitability, as well as in the relationship between market concentration and risk. The empirical analysis was performed on a sample of 15,399 banks from major OECD countries over the period 2002–2009. The results show that market power was replaced by efficiency as the main determinant of bank profitability during the crisis. Prior to the crisis, market concentration and risk had a quadratic relationship, while thereafter the increase in market concentration produced no increase in risk.

Suggested Citation

  • Sergio SANFILIPPO AZOFRA & Maria CANTERO SAIZ & Begona TORRE OLMO & Carlos LOPEZ GUTIERREZ, 2013. "Financial Crises, Concentration and Efficiency: Effects on Performance and Risk of Banks," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 63(6), pages 537-558, December.
    • Handle: RePEc:fau:fauart:v:63:y:2013:i:6:p:537-558
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    More about this item

    Keywords

    financial crisis; performance; risk; banks;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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