On measuring concentration in banking systems
AbstractAssuming a Pareto-type distribution of bank sizes, we investigate the effect of changes in Zipf's exponent ([alpha]) and the sample size on the behavior of different concentration indices, such as the 3-bank concentration ratio, the Herfindahl-Hirschman index and the top 5%-concentration ratio. We derive analytical relations between these concentration indices and investigate the elasticity of these indices to changes in [alpha] and in the sample size N. We show different regimes under which each index can be used most appropriately. Our results are highly relevant for policymakers who rely on such concentration measures to derive public policy recommendations in banking.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Finance Research Letters.
Volume (Year): 5 (2008)
Issue (Month): 1 (March)
Contact details of provider:
Web page: http://www.elsevier.com/locate/frl
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Frederic S. Mishkin, 1999.
"Financial Consolidation: Dangers and Opportunities,"
NBER Working Papers
6655, National Bureau of Economic Research, Inc.
- S. Mishkin, Frederic, 1999. "Financial consolidation: Dangers and opportunities," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 675-691, February.
- Claessens, Stijn & Demirguc-Kunt, Asl[iota] & Huizinga, Harry, 2001. "How does foreign entry affect domestic banking markets?," Journal of Banking & Finance, Elsevier, vol. 25(5), pages 891-911, May.
- Stanley, Michael H. R. & Buldyrev, Sergey V. & Havlin, Shlomo & Mantegna, Rosario N. & Salinger, Michael A. & Eugene Stanley, H., 1995. "Zipf plots and the size distribution of firms," Economics Letters, Elsevier, vol. 49(4), pages 453-457, October.
- Barth, James R. & Caprio Jr., Gerard & Levine, Ross, 2001.
"Bank regulation and supervision : what works best?,"
Policy Research Working Paper Series
2725, The World Bank.
- Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2006.
"Bank concentration, competition, and crises: First results,"
Journal of Banking & Finance,
Elsevier, vol. 30(5), pages 1581-1603, May.
- Beck, T.H.L. & Demirgüç-Kunt, A. & Levine, R., 2006. "Bank concentration, competition, and crises: First results," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125498, Tilburg University.
- Ramsden, J.J. & Kiss-Haypál, Gy., 2000. "Company size distribution in different countries," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 277(1), pages 220-227.
- J.A. Bikker & K. Haaf, 2000.
"Competition, concentration and their relationship: an empirical analysis of the banking industry,"
Research Series Supervision (discontinued)
30, Netherlands Central Bank, Directorate Supervision.
- Bikker, Jacob A. & Haaf, Katharina, 2002. "Competition, concentration and their relationship: An empirical analysis of the banking industry," Journal of Banking & Finance, Elsevier, vol. 26(11), pages 2191-2214, November.
- J.A. Bikker & K. Haaf, 2001. "Competition, Concentration and their Relationship: an EmpiricalAnalysis of the Banking Industry," DNB Staff Reports (discontinued) 68, Netherlands Central Bank.
- Xavier Gabaix, 1999. "Zipf's Law and the Growth of Cities," American Economic Review, American Economic Association, vol. 89(2), pages 129-132, May.
- Naldi, M., 2003. "Concentration indices and Zipf's law," Economics Letters, Elsevier, vol. 78(3), pages 329-334, March.
- Nicola Cetorelli, 1999. "Competitive analysis in banking: appraisal of the methodologies," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 2-15.
- Guidara, Alaa & Lai, Van Son & Soumaré, Issouf & Tchana, Fulbert Tchana, 2013.
"Banks’ capital buffer, risk and performance in the Canadian banking system: Impact of business cycles and regulatory changes,"
Journal of Banking & Finance,
Elsevier, vol. 37(9), pages 3373-3387.
- Guidara, Alaa & Lai, Van Son & Soumaré, Issouf & Tchana Tchana, Fulbert, 2013. "Banks’ Capital Buffer, Risk and Performance in the Canadian Banking System: Impact of Business Cycles and Regulatory Changes," MPRA Paper 44105, University Library of Munich, Germany.
- Tomson Ogwang, 2011. "Power laws in top wealth distributions: evidence from Canada," Empirical Economics, Springer, vol. 41(2), pages 473-486, October.
- Allen Berger & Leora Klapper & Rima Turk-Ariss, 2009.
"Bank Competition and Financial Stability,"
Journal of Financial Services Research,
Springer, vol. 35(2), pages 99-118, April.
- Martin CIHAK, 2007. "Systemic Loss: A Measure of Financial Stability (in English)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 57(1-2), pages 5-26, March.
- Leonardo S. Alencar, 2011.
"Revisiting Bank Pricing Policies in Brazil: evidence from loan and deposit markets,"
Working Papers Series
235, Central Bank of Brazil, Research Department.
- Leonardo S. Alencar, 2012. "Revisiting Bank Pricing Policies in Brazil: Evidence from Loan and Deposit Markets," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(67), pages 35-71, December.
- Nguyen, My & Skully, Michael & Perera, Shrimal, 2012. "Bank market power and revenue diversification: Evidence from selected ASEAN countries," Journal of Asian Economics, Elsevier, vol. 23(6), pages 688-700.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.