Are More Competitive Banking Systems More Stable?
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Summary:
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.
Series:
Working Paper No. 2006/143
Subject:
Banking Commercial banks Competition Logit models Systemic crises
English
Publication Date:
June 1, 2006
ISBN/ISSN:
9781451864038/1018-5941
Stock No:
WPIEA2006143
Pages:
37
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