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Banking Competition and Financial Fragility: Evidence from Panel-Data

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  • Antonio Ruiz-Porras

    (Instituto Tecnológico y de Estudios Superiores de Monterrey)

Abstract

We study how competition may affect the stability of banking systems. We modify the failure-determinant methodology to include panel-data techniques. We use indicators for 47 countries between 1990 and 1997. The main findings show that banking concentration and foreign ownership are associated to bank-based financial systems and financial underdevelopment. They also show that banking credit and bank-based financial systems enhance banking fragility. Banking concentration is not a significant determinant. Furthermore our findings suggest that financial structure and, maybe, the property regime matter to assess such fragility.

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File URL: http://codex.colmex.mx:8991/exlibris/aleph/a18_1/apache_media/3JV3YEQGEUM5C3PSHEFSDUJHX6KUHT.pdf
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Bibliographic Info

Article provided by El Colegio de México, Centro de Estudios Económicos in its journal Estudios Económicos.

Volume (Year): 23 (2008)
Issue (Month): 1 ()
Pages: 49-87

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Handle: RePEc:emx:esteco:v:23:y:2008:i:1:p:49-87

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Web page: http://www.colmex.mx/centros/cee/
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Related research

Keywords: banks; competition; fragility; financial systems.;

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  1. Demirguc-Kunt, Asli & Detragiache, Enrica, 2005. "Cross-country empirical studies of systemic bank distress : a survey," Policy Research Working Paper Series 3719, The World Bank.
  2. Rolnick, Arthur J & Weber, Warren E, 1983. "New Evidence on the Free Banking Era," American Economic Review, American Economic Association, vol. 73(5), pages 1080-91, December.
  3. Kaniska Dam & Susana Wendy Zendejas Castillo, 2006. "Market power and risk taking behavior of banks," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 21(1), pages 55-84.
  4. Loayza, Norman V. & Ranciere, Romain, 2006. "Financial Development, Financial Fragility, and Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(4), pages 1051-1076, June.
  5. Ruiz-Porras, Antonio, 2006. "Financial systems and banking crises: An assessment," MPRA Paper 168, University Library of Munich, Germany.
  6. Demirguc-Kunt, Asli & Huizinga, Harry, 2000. "Financial structure and bank profitability," Policy Research Working Paper Series 2430, The World Bank.
  7. Dowd, Kevin, 1996. "The Case for Financial Laissez-Faire," Economic Journal, Royal Economic Society, vol. 106(436), pages 679-87, May.
  8. Daniel C. Hardy & Ceyla Pazarbasioglu, 1999. "Determinants and Leading Indicators of Banking Crises: Further Evidence," IMF Staff Papers, Palgrave Macmillan, vol. 46(3), pages 1.
  9. Caminal, Ramon & Matutes, Carmen, 2002. "Market power and banking failures," International Journal of Industrial Organization, Elsevier, vol. 20(9), pages 1341-1361, November.
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Citations

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Cited by:
  1. Bretschger, Lucas & Kappel, Vivien & Werner, Therese, 2012. "Market concentration and the likelihood of financial crises," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3336-3345.
  2. Ruiz-Porras, Antonio, 2008. "Financial structure, financial development and banking fragility: International evidence," MPRA Paper 12124, University Library of Munich, Germany.
  3. Ruiz-Porras, Antonio, 2012. "La investigación econométrica mediante paneles de datos: Historia, modelos y usos en México
    [Econometric research with panel data: History, models and uses in Mexico]
    ," MPRA Paper 42909, University Library of Munich, Germany.

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