Are More 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...

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Bibliographic Details
Main Author: Cihak, Martin
Other Authors: Schaeck, Klaus, Wolfe, Simon
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 2006.
Series:IMF Working Papers; Working Paper ; No. 2006/143
Online Access:Full text available on IMF
Description
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.
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Physical Description:1 online resource (37 pages)
Format:Mode of access: Internet
ISSN:1018-5941
Access:Electronic access restricted to authorized BRAC University faculty, staff and students