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Bank Concentration and Credit Volatility

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  • Alejandro Micco
  • Ugo Panizza

Abstract

This paper uses an unbalanced panel covering ninety-three countries over the 1990-2002 period to study the empirical relationship between bank concentration and credit volatility. The paper finds that there is a strong negative relationship between loans concentration and credit sensitivity to external shocks. It also shows that this result is robust to different samples, measures of concentration and econometric techniques, and that this relationship is not driven by crisis episodes. These results are in line with the hypothesis that banks with a larger market share can internalize the countercyclical effects of expanding credit during recessions.

Suggested Citation

  • Alejandro Micco & Ugo Panizza, 2005. "Bank Concentration and Credit Volatility," Working Papers Central Bank of Chile 342, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:342
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    File URL: https://www.bcentral.cl/documents/33528/133326/DTBC_342.pdf
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    References listed on IDEAS

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    Cited by:

    1. Folorunsho M. Ajide, 2019. "Remittances, Bank Concentration and Credit Availability in Nigeria," Journal of Development Policy and Practice, , vol. 4(1), pages 66-88, January.

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    More about this item

    JEL classification:

    • F39 - International Economics - - International Finance - - - Other
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • 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

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