IDEAS home Printed from https://ideas.repec.org/a/ukb/journl/y2015i234p6-38.html
   My bibliography  Save this article

Concentration of Ukraine’s Banking System: Myths and Facts

Author

Listed:
  • Vladyslav Rashkovan

    (National Bank of Ukraine)

  • Roman Kornyliuk

    (Vadym Hetman Kyiv National Economic University)

Abstract

This article attempts to find answers to questions of current significance: How concentrated is Ukraine’s banking system from the viewpoint of the world’s best regulatory practices and in comparison with other countries? What has been the driving force behind the growing concentration in recent years and does this process pose a threat to competition in the banking system? What effect would mergers and acquisitions in the banking sector have on the concentration of the banking system? And finally, do public authorities have to stimulate consolidation in the banking system or, on the contrary, restrain potential bank mergers and acquisitions? The results of empirical analysis dispel the persisting myths about the risks of fast and excessive concentration resulting from continuing market consolidation and about the substantial impact of inequality on the growing concentration, and refute the perceived danger of mergers and acquisitions in the banking sector. Instead, it was discovered that concentration of banking assets in Ukraine is not substantial according to the Herfindahl–Hirschman Index (HHI), CRn concentration index and other ratios. At the same time, in the conditions of continuing consolidation of the banking system via mergers and acquisitions and a decreasing number of banks, upward trends are observed within moderate, average European levels. Therefore, these new conditions require closer attention on the part of banking regulators to assess possible consequences of concentration. This article provides recommendations to the National Bank of Ukraine (NBU) and the Antimonopoly Committee of Ukraine (AMCU) on how to improve monitoring of banking concentration processes and better regulate consolidation processes in bank mergers and acquisitions. A complex of preventive macroprudential measures was offered to offset the negative consequences of concentration and achieve an optimal degree of market consolidation.

Suggested Citation

  • Vladyslav Rashkovan & Roman Kornyliuk, 2015. "Concentration of Ukraine’s Banking System: Myths and Facts," Visnyk of the National Bank of Ukraine, National Bank of Ukraine, issue 234, pages 6-38.
  • Handle: RePEc:ukb:journl:y:2015:i:234:p:6-38
    DOI: 10.26531/vnbu2015.234.006
    as

    Download full text from publisher

    File URL: https://journal.bank.gov.ua/en/article/2015/234/01
    Download Restriction: no

    File URL: https://libkey.io/10.26531/vnbu2015.234.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Luc Laeven & Lev Ratnovski & Hui Tong, 2014. "Bank Size and Systemic Risk," IMF Staff Discussion Notes 14/4, International Monetary Fund.
    2. Mr. Luc Laeven & Mr. Lev Ratnovski & Mr. Hui Tong, 2014. "Bank Size and Systemic Risk," IMF Staff Discussion Notes 2014/004, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pham, Tho & Talavera, Oleksandr & Tsapin, Andriy, 2022. "Branch network structure, authority and lending behaviour," Economic Systems, Elsevier, vol. 46(4).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Delis, Manthos D. & Hasan, Iftekhar & Tsionas, Efthymios G., 2015. "Firms' risk endogenous to strategic management choices," Bank of Finland Research Discussion Papers 16/2015, Bank of Finland.
    2. Q. Farooq Akram & Casper Christophersen, 2017. "Pricing in the Norwegian Interbank Market – the Effects of Liquidity and Implicit Government Support," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(2), pages 165-204, April.
    3. Marc Blatter & Andreas Fuster, 2022. "Scale effects on efficiency and profitability in the Swiss banking sector," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-24, December.
    4. Muhammad Ali & Chin-Hong Puah, 2018. "Does Bank Size and Funding Risk Effect Banks’ Stability? A Lesson from Pakistan," Global Business Review, International Management Institute, vol. 19(5), pages 1166-1186, October.
    5. Thomas Kiptanui Tarus & Joel K Tenai & Joyce Komen, 2020. "Does Ownership Structure Affect Risk Management? Evidence from an Emerging Economy, Kenya," Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, vol. 8(1), pages 1-10.
    6. Christian Castro & Jorge E. Galán, 2019. "Drivers of Productivity in the Spanish Banking Sector: Recent Evidence," Journal of Financial Services Research, Springer;Western Finance Association, vol. 55(2), pages 115-141, June.
    7. Mamatzakis, Emmanuel C. & Ongena, Steven & Tsionas, Mike G., 2021. "Does alternative finance moderate bank fragility? Evidence from the euro area," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 72(C).
    8. Jiahong Gao & Robert R. Reed, 2023. "Preventing bank panics: The role of the regulator's preferences," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(2), pages 387-422, May.
    9. Leroy, Aurélien & Lucotte, Yannick, 2017. "Is there a competition-stability trade-off in European banking?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 46(C), pages 199-215.
    10. Ma, Chang & Nguyen, Xuan-Hai, 2021. "Too big to fail and optimal regulation," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 747-758.
    11. Buch, Claudia M. & Krause, Thomas & Tonzer, Lena, 2019. "Drivers of systemic risk: Do national and European perspectives differ?," Journal of International Money and Finance, Elsevier, vol. 91(C), pages 160-176.
    12. Yang, Hsin-Feng & Liu, Chih-Liang & Yeutien Chou, Ray, 2020. "Bank diversification and systemic risk," The Quarterly Review of Economics and Finance, Elsevier, vol. 77(C), pages 311-326.
    13. Dávila, Eduardo & Walther, Ansgar, 2020. "Does size matter? Bailouts with large and small banks," Journal of Financial Economics, Elsevier, vol. 136(1), pages 1-22.
    14. repec:bof:bofrdp:urn:nbn:fi:bof-201503041096 is not listed on IDEAS
    15. Addo, Kwabena Aboah & Hussain, Nazim & Iqbal, Jamshed, 2021. "Corporate Governance and Banking Systemic Risk: A Test of the Bundling Hypothesis," Journal of International Money and Finance, Elsevier, vol. 115(C).
    16. Bernadette A Minton & René M Stulz & Alvaro G Taboada, 2019. "Are the Largest Banks Valued More Highly?," The Review of Financial Studies, Society for Financial Studies, vol. 32(12), pages 4604-4652.
    17. Duijm, Patty & Schoenmaker, Dirk, 2021. "European banks straddling borders: Risky or rewarding?," Finance Research Letters, Elsevier, vol. 38(C).
    18. Stijn Claessens & Neeltje van Horen, 2015. "The Impact of the Global Financial Crisis on Banking Globalization," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 63(4), pages 868-918, November.
    19. Patricia Palhau Mora, 2018. "The “Too Big to Fail” Subsidy in Canada: Some Estimates," Staff Working Papers 18-9, Bank of Canada.
    20. Pino, Gabriel, 2022. "Did small or large US banks transmit more risk during the Subprime crisis?," The North American Journal of Economics and Finance, Elsevier, vol. 59(C).
    21. Pietro Alessandrini & Michele Fratianni & Luca Papi & Alberto Zazzaro, 2016. "Banks, regions and development after the crisis and under the new regulatory system," Mo.Fi.R. Working Papers 124, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.

    More about this item

    Keywords

    banking system; concentration; consolidation; macroprudential regulation; systemic risk;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ukb:journl:y:2015:i:234:p:6-38. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Research Unit (email available below). General contact details of provider: https://edirc.repec.org/data/nbugvua.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.