The University of Southampton
University of Southampton Institutional Repository

Does bank competition and diversification lead to greater stability? evidence from emerging markets

Does bank competition and diversification lead to greater stability? evidence from emerging markets
Does bank competition and diversification lead to greater stability? evidence from emerging markets
This paper investigates how the level of competition affects diversification and stability using a sample of 978 banks in 55 emerging and developing countries over an eight year period 2000-2007. We shed further light on the competition-stability nexus by examining the complex interaction between three key variables: the degree of bank market power, diversification and stability. The core finding is that competition increases stability as diversification across and within both interest and non-interest income generating activities of banks increases. Our analysis identifies revenue diversification as a channel through which competition affects bank insolvency risk in emerging countries. The results are robust to an array of controls including alternative methodology, variable specifications and the regulatory environments that banks operate in.
1879-9337
152-166
Wolfe, Simon
9a2367fc-36cc-496a-bbd2-e7346bcbb19e
Amidu, M.
81925c89-004b-4720-86d4-2cc536cf12b8
Wolfe, Simon
9a2367fc-36cc-496a-bbd2-e7346bcbb19e
Amidu, M.
81925c89-004b-4720-86d4-2cc536cf12b8

Wolfe, Simon and Amidu, M. (2013) Does bank competition and diversification lead to greater stability? evidence from emerging markets. Review of Development Finance, 3 (3), 152-166. (doi:10.1016/j.rdf.2013.08.002).

Record type: Article

Abstract

This paper investigates how the level of competition affects diversification and stability using a sample of 978 banks in 55 emerging and developing countries over an eight year period 2000-2007. We shed further light on the competition-stability nexus by examining the complex interaction between three key variables: the degree of bank market power, diversification and stability. The core finding is that competition increases stability as diversification across and within both interest and non-interest income generating activities of banks increases. Our analysis identifies revenue diversification as a channel through which competition affects bank insolvency risk in emerging countries. The results are robust to an array of controls including alternative methodology, variable specifications and the regulatory environments that banks operate in.

This record has no associated files available for download.

More information

Published date: 17 September 2013
Organisations: Southampton Business School

Identifiers

Local EPrints ID: 359936
URI: http://eprints.soton.ac.uk/id/eprint/359936
ISSN: 1879-9337
PURE UUID: 4d9a20b7-0608-4c17-86d3-8b6a54ae9999
ORCID for Simon Wolfe: ORCID iD orcid.org/0000-0001-9815-9535

Catalogue record

Date deposited: 18 Nov 2013 13:25
Last modified: 15 Mar 2024 02:45

Export record

Altmetrics

Contributors

Author: Simon Wolfe ORCID iD
Author: M. Amidu

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of http://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×