Market structure, financial intermediation and riskiness of banks:Evidence from Asia Pacific
AbstractFrom a sample of commercial banks in Asia Pacific over the 1994-2009 period, this study highlights that banks in less competitive markets exhibit lower loan growth and higher instability. Such instability is further followed by a decline in deposit growth, suggesting that Asian banks are also subject to indirect market discipline mechanisms through bank market structure. This study therefore sheds light on the importance of enhancing bank competition to overcome bank risk and strengthen financial intermediation. This study also advocates greater reliance on market discipline to promote bank stability.
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Date of creation: 2014
Date of revision:
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Bank competition; loan growth; risk; market discipline; Asia Pacific;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-03-01 (All new papers)
- NEP-BAN-2014-03-01 (Banking)
- NEP-COM-2014-03-01 (Industrial Competition)
- NEP-SEA-2014-03-01 (South East Asia)
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