Are competitive banking systems more stable?
Are competitive banking systems more stable?
This paper provides the first empirical analysis of the cross-country relationship between a direct measure of competitive conduct of financial institutions and banking system fragility. Using the Panzar and Rosse H-Statistic as a measure for competition in 38 countries during 1980–2003, we present evidence that more competitive banking systems are less prone to systemic crises and that time to crisis is longer in a competitive environment. Our results hold when concentration and the regulatory environment are controlled for and are robust to different methodologies, different sampling periods, and alternative samples.
systemic risk, banking competition, market structure, regulation, duration analysis
International Monetary Fund
Schaeck, Klaus
9a2367fc-36cc-496a-bbd2-e7346bcbb19e
Čihák, Martin
46855153-9993-4dd0-ba47-cc757cf27039
Wolfe, Simon
7a6df196-b8c9-49cc-9428-fcc2df477e13
2006
Schaeck, Klaus
9a2367fc-36cc-496a-bbd2-e7346bcbb19e
Čihák, Martin
46855153-9993-4dd0-ba47-cc757cf27039
Wolfe, Simon
7a6df196-b8c9-49cc-9428-fcc2df477e13
Schaeck, Klaus, Čihák, Martin and Wolfe, Simon
(2006)
Are competitive banking systems more stable?
Washington D.C., USA.
International Monetary Fund
35pp.
Record type:
Monograph
(Working Paper)
Abstract
This paper provides the first empirical analysis of the cross-country relationship between a direct measure of competitive conduct of financial institutions and banking system fragility. Using the Panzar and Rosse H-Statistic as a measure for competition in 38 countries during 1980–2003, we present evidence that more competitive banking systems are less prone to systemic crises and that time to crisis is longer in a competitive environment. Our results hold when concentration and the regulatory environment are controlled for and are robust to different methodologies, different sampling periods, and alternative samples.
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Published date: 2006
Keywords:
systemic risk, banking competition, market structure, regulation, duration analysis
Identifiers
Local EPrints ID: 37491
URI: http://eprints.soton.ac.uk/id/eprint/37491
PURE UUID: 730c5436-c5c1-4e0e-b922-32df2d8fbd25
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Date deposited: 20 Jun 2006
Last modified: 12 Dec 2021 02:46
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Contributors
Author:
Martin Čihák
Author:
Simon Wolfe
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