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Bank Risk-Taking and Competition in the Albanian Banking Sector

Author

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  • Elona Dushku

    (University of Rome, Italy)

Abstract

Exploring the link between competition and bank risk is an important issue for financial stability and for the economy as a whole. We have used bank level data to empirically test the relationship between bank risk and competition in Albania during the 2004-2014 period. Our results confirm the "competition-fragility" view for the total (and foreign) credit risk, where higher market power is associated with lower risk. Furthermore, we have revealed some aspects of the "competitionstability" relationship concerning nonperforming loans in local currency. We are providing evidence that, after the crisis, the relationship between total (plus foreign) credit risk and competition is nonlinear.

Suggested Citation

  • Elona Dushku, 2016. "Bank Risk-Taking and Competition in the Albanian Banking Sector," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 14(2), pages 187-203.
    • Handle: RePEc:seb:journl:v:14:y:2016:i:2:p:187-203
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Shijaku, Gerti, 2017. "Bank Stability and Competition: Evidence from Albanian Banking Market," MPRA Paper 79891, University Library of Munich, Germany.
    2. Samangi Bandaranayake & Kuntal K. Das & Robert W. Reed, 2020. "Another Look At ‘Bank Competition And Financial Stability: Much Ado About Nothing’?," Journal of Economic Surveys, Wiley Blackwell, vol. 34(2), pages 344-371, April.
    3. Samangi Bandaranayake & Kuntal K. Das & W. Robert Reed, 2018. "A Replication of “Bank Competition and Financial Stability: Much Ado About Nothing?” (Journal of Economic Surveys, 2016)," Working Papers in Economics 18/18, University of Canterbury, Department of Economics and Finance.
    4. Gerti Shijaku, 2017. "How Does Competition Affect Bank Stability After the Global Crises in the Case of the Albanian Banking System?," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 15(2), pages 175-208.

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    More about this item

    Keywords

    Bank Competition; Credit Risk; Financial Stability; Lerner Index;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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