Are More Competitive Banking Systems More Stable?
AbstractThis paper provides the first empirical analysis of the cross-country relationship between a direct measure of competitive conduct of financial institutions and banking system fragility. Using the Panzar and Rosse H-Statistic as a measure for competition in 38 countries during 1980-2003, we present evidence that more competitive banking systems are less prone to systemic crises and that time to crisis is longer in a competitive environment. Our results hold when concentration and the regulatory environment are controlled for and are robust to different methodologies, different sampling periods, and alternative samples.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 06/143.
Date of creation: 01 Jun 2006
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-08-05 (All new papers)
- NEP-BAN-2006-08-05 (Banking)
- NEP-COM-2006-08-05 (Industrial Competition)
- NEP-FMK-2006-08-05 (Financial Markets)
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