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Bank Consolidation, Internationalization and Conglomeration

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Author Info

  • Gianni De Nicoló
  • M. G. Zephirin
  • Philip F. Bartholomew
  • Jahanara Zaman
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    Abstract

    This paper documents global trends in bank activity, consolidation, internationalization, and financial firm conglomeration, and explores the extent to which financial firm risk and systemic risk potential in banking are related to consolidation and conglomeration. We find that while there is a substantial upward trend in conglomeration globally, consolidation and internationalization exhibit uneven patterns across world regions. Trends in consolidation and conglomeration indicate increased risk profiles for large, conglomerate financial firms, and higher levels of systemic risk potential for more concentrated banking systems. We outline research directions aimed at explaining why bank consolidation and conglomeration do not necessarily yield either safer financial firms or more resilient banking systems.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/158.

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    Length: 44
    Date of creation: 01 Jul 2003
    Date of revision:
    Handle: RePEc:imf:imfwpa:03/158

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    Related research

    Keywords: Financial risk; Banking; Banking systems; financial institutions; deposit money; banking system; banking industry; deposit money banks; foreign asset; financial services; bank assets; bank mergers; banking crises; bank consolidation; equity capital; financial system; return on assets; bank activity; bank risk; bank holding; moral hazard; bank for international settlements; banking markets; bank holding companies; banking system concentration; financial sector; bank ownership; deposit insurance; deposit growth; international financial statistics; assets of deposit money banks; banking distress; assets of deposit money; bank policy; financial systems; financial assets; derivative; banking assets; bank acquisitions; bank of england; financial markets; bank diversification; derivative instruments; banking institutions; banking industries; banking ? crises; banking firm; bank financing; retail banking; banking regulation; international capital; banking ? distress; bank loan; bank holding company; bank intermediation; banking crisis; financial intermediation; bank funding; banking system asset; equity market; stock market; bank deposits; banking system assets; financial deregulation; bank recapitalizations; currency crises; banks with assets; international finance; bank entry; financial conglomerates; banker; holding company; bank subsidiaries; interbank market; bank profitability; financial stability;

    References

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    7. Stiroh, Kevin J, 2004. "Diversification in Banking: Is Noninterest Income the Answer?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(5), pages 853-82, October.
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    Citations

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    Cited by:
    1. John H. Boyd & Gianni De Nicoló & Bruce D. Smith, 2004. "Crises in competitive versus monopolistic banking systems," Proceedings, Federal Reserve Bank of Cleveland, pages 487-509.
    2. Martin Cihák & Richard Podpiera, 2006. "Isone Watchdog Better Than Three? International Experience with Integrated Financial Sector Supervision," IMF Working Papers 06/57, International Monetary Fund.
    3. Inwon Song, 2004. "Foreign Bank Supervision and Challenges to Emerging Market Supervisors," IMF Working Papers 04/82, International Monetary Fund.
    4. Nicola Cetorelli & Beverly Hirtle & Donald Morgan & Stavros Peristiani & João Santos, 2007. "Trends in financial market concentration and their implications for market stability," Economic Policy Review, Federal Reserve Bank of New York, issue Mar, pages 33-51.
    5. James Crotty, 2007. "If Financial Market Competition is so Intense, Why are Financial Firm Profits so High? Reflections on the Current ‘Golden Age’ of Finance," Working Papers wp134, Political Economy Research Institute, University of Massachusetts at Amherst.
    6. Elena Loukoianova, 2008. "Analysis of the Efficiency and Profitability of the Japanese Banking System," IMF Working Papers 08/63, International Monetary Fund.
    7. Sufian, Fadzlan & Habibullah, Muzafar Shah, 2012. "Globalizations and bank performance in China," Research in International Business and Finance, Elsevier, vol. 26(2), pages 221-239.
    8. Claudio Agostini & Eduardo Saavedra & Manuel Willington, 2012. "Economies of Scale and Merger Efficiencies: Empirical Evidence from the Chilean Pension Funds Market," Working Papers wp_027, Adolfo Ibáñez University, School of Government.
    9. Caprio, Gerard & Honohan, Patrick, 2004. "Can the unsophisticated market provide discipline?," Policy Research Working Paper Series 3364, The World Bank.
    10. De Nicolo, Gianni & Honohan, Patrick & Ize, Alain, 2003. "Dollarization of the banking system : good or bad?," Policy Research Working Paper Series 3116, The World Bank.
    11. Gianni De Nicoló & Patrick Honohan & Alain Ize, 2003. "Dollarization of the Banking System," IMF Working Papers 03/146, International Monetary Fund.
    12. Melanie S. Milo, 2007. "Integrated Financial Supervision : An Institutional Perspective for the Philippines," Finance Working Papers 22667, East Asian Bureau of Economic Research.
    13. Alicia Garcia-Herrero & Daniel Navia Simon, 2006. "Why Banks go to Emerging Countries and What is the Impact for the Home Economy? A Survey," Working Papers 0602, BBVA Bank, Economic Research Department.

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