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The concentration and bank stability in Central and Eastern European countries

Author

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  • Renata Karkowska

    (University of Warsaw)

  • Małgorzata Pawłowska

    (Warsaw School of Economics; Narodowy Bank Polski;)

Abstract

The aim of this paper is to discuss changes in the banking sectors in Central and Eastern European countries, with particular emphasis on the change in market structure, the concentration and the share of foreign capital, in an attempt to determine the relationship between market structure and stability in the period 1999-2015. Using the methodology of panel regression, GMM estimator, we examine the implications of banks’ concentration that manifest themselves as spreading and growing instability. The study contributes to the literature by focusing on a group of countries from Central and Eastern Europe, which are not explain in previous research and they are playing the role of a host country for banks from a number of countries in Europe. Finally, our results reveal that the persistence of risk is affected by the level of bank concentration and this effect is exacerbated during the downturn.

Suggested Citation

  • Renata Karkowska & Małgorzata Pawłowska, 2017. "The concentration and bank stability in Central and Eastern European countries," NBP Working Papers 272, Narodowy Bank Polski.
    • Handle: RePEc:nbp:nbpmis:272
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    References listed on IDEAS

    as
    1. Weiß, Gregor N.F. & Neumann, Sascha & Bostandzic, Denefa, 2014. "Systemic risk and bank consolidation: International evidence," Journal of Banking & Finance, Elsevier, vol. 40(C), pages 165-181.
    2. Wu, Ji & Chen, Minghua & Jeon, Bang Nam & Wang, Rui, 2017. "Does foreign bank penetration affect the risk of domestic banks? Evidence from emerging economies," Journal of Financial Stability, Elsevier, vol. 31(C), pages 45-61.
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    Cited by:

    1. Dariusz Filip & Tomasz Miziołek, 2019. "Market Concentration in the Polish Investment Fund Industry," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 4, pages 53-78.
    2. Vodová,Pavla Klepková & PaleÄ ková,Iveta & Stavárek,Daniel, 2023. "Banking Stability and Financial Conglomerates in European Emerging Countries," Cambridge Books, Cambridge University Press, number 9781009095112, September.
    3. Yilmaz Bayar & Djula Borozan & Marius Dan Gavriletea, 2021. "Banking sector stability and economic growth in post‐transition European Union countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 949-961, January.

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    More about this item

    Keywords

    banking; concentration; foreign ownership; stability; CEE countries;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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