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Assessing lending market concentration in Bulgaria: the application of a new measure of concentration

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  • Ion Lapteacru

Abstract

This paper has a twofold interest. First, we construct new concentration measures that alleviate some shortcomings of the most frequently applied indexes, which are Herfindahl-Hirshman and Entropy measures. They also provide additional information about the way in which the loan portfolio is concentrated according to sectoral funding size. Second, we aim to find the factors that explain the banking lending concentration in Bulgaria. Applying a dynamic-panel model, it is shown that liquidity, loan portfolio level and the level of money in circulation influence the way in which the Bulgarian banks lend to different economic sectors. It should be mentioned that only liquidity level influences the loan concentration, if it is measured with Herfindahl-Hirshman and Entropy indexes, which suggest that these concentration measures perform worse than our global concentration index

Suggested Citation

  • Ion Lapteacru, 2012. "Assessing lending market concentration in Bulgaria: the application of a new measure of concentration," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 9(1), pages 79-102, April.
    • Handle: RePEc:liu:liucej:v:9:y:2012:i:1:p:79-102
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    References listed on IDEAS

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    Cited by:

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    2. Kevin Ghislain Adjé, 2018. "Determinants of Bank Credit Risk in Developing Economies: Evidence from Benin," International Business Research, Canadian Center of Science and Education, vol. 11(4), pages 154-163, April.

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    More about this item

    Keywords

    Global Concentration Index; alpha-concentration; beta-concentration; banking; Bulgaria.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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