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What About The Relationship Between Banking Competition And Financial Stability? Case Of Albania

Author

Listed:
  • MSc. Arjan Tushaj

    (7) Ph D Student, Department of Economics, Faculty of Economics, University of Tirana, Albania)

  • PhD. Valentina Sinaj

    (Department of Maths and Statistics, Faculty of Economics, University of Tirana, Albania)

Abstract

The banking sector serves as a key instrument through which instability may be transmitted to other sectors in the economy. The scare due to banking fragility caused by upper concentration, has usually strained policymakers to focus on developing policies which sustain stability of banking sector. Currently, we faced to global financial crisis and consequences of it. That’s one more reason to be more careful at this time, particularly, concerning banking sector. Banking competition is more complicated by the requisite of maintaining financial stability. Increasing competition may be good for efficiency, but bad for financial stability. Some theoretical and empirical results emphasized that more concentrated banking markets are associated with greater risk of bank failures. Various cases provide empirical evidence of a positive relationship between banking market concentration and bank risk-taking. The article examines the empirical nature of the correlation between bank concentration, as an indicator to assess competition, and financial stability, using unique datasets of Albanian banking system.

Suggested Citation

  • MSc. Arjan Tushaj & PhD. Valentina Sinaj, 2012. "What About The Relationship Between Banking Competition And Financial Stability? Case Of Albania," Journal Articles, Center For Economic Analyses, pages 25-32, June.
    • Handle: RePEc:cmk:journl:y:2012:p:25-32
    as

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    File URL: http://journal.cea.org.mk/files/journals/1/articles/6/public/6-23-1-PB.pdf
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    References listed on IDEAS

    as
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    2. Amir Hadziomeragic & Malgorzata Jakubiak & Nermin Oruc & Wojciech Paczynski, 2007. "Regional Free Trade Agreements of Bosnia and Herzegovina: analysis and policy recommendations," CASE Network Reports 0069, CASE-Center for Social and Economic Research.
    3. Predrag Bjelić & Danijela Jaćimović & Ivan Tašić, 2013. "Effects Of The World Economic Crisis On Exports In The Ceec: Focus On The Western Balkans," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 58(196), pages 71-98, January –.
    4. Ljiljana Pjerotić, 2008. "Trade Liberalization in the South East Europe Effects and Controversial Issues," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 55(4), pages 497-522, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bank Competition; Financial Stability; Z score; Non Performing Loans;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets

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