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Market structure, financial intermediation and riskiness of banks:Evidence from Asia Pacific

Author

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  • Wahyoe Soedarmono

    (Universitas Siswa Bangsa Internasional, Faculty of Business / Sampoerna School of Business)

  • Amine Tarazi

    (LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges)

Abstract

From a sample of commercial banks in Asia Pacific over the 1994-2009 period, this study highlights that banks in less competitive markets exhibit lower loan growth and higher instability. Such instability is further followed by a decline in deposit growth, suggesting that Asian banks are also subject to indirect market discipline mechanisms through bank market structure. This study therefore sheds light on the importance of enhancing bank competition to overcome bank risk and strengthen financial intermediation. This study also advocates greater reliance on market discipline to promote bank stability.

Suggested Citation

  • Wahyoe Soedarmono & Amine Tarazi, 2015. "Market structure, financial intermediation and riskiness of banks:Evidence from Asia Pacific," Post-Print hal-01134830, HAL.
    • Handle: RePEc:hal:journl:hal-01134830
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    3. Zhang, Dayong & Cai, Jing & Dickinson, David G. & Kutan, Ali M., 2016. "Non-performing loans, moral hazard and regulation of the Chinese commercial banking system," Journal of Banking & Finance, Elsevier, vol. 63(C), pages 48-60.

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