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Measuring Competition and Stability: Recent Evidence for European Banking


  • Phil Molyneux

    () (Bangor University)

  • Hong Liu

    (Bangor University)

  • John O.S. Wilson

    (University of St Andrews)


This paper uses a variety of structural and non-structural measures (including the Lerner index, Rosse-Panzar H-statistic and Profits-Persistence parameters) to gauge competitive conditions in 11 European banking systems over 1997 to 2008. As in Carbo et al (2009) we find that competition measures tend to provide inconsistent results and the measures are statistically unrelated. We also find that our banking sector risk measures (Z-score, loan-loss provisions, variation in ROE and ROA) are unrelated to the various competition measures. This raises doubts about the generality of the findings of previous empirical studies that investigate competition-stability and competition fragility issues.

Suggested Citation

  • Phil Molyneux & Hong Liu & John O.S. Wilson, 2010. "Measuring Competition and Stability: Recent Evidence for European Banking," Working Papers 10020, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
  • Handle: RePEc:bng:wpaper:10020

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    References listed on IDEAS

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    Cited by:

    1. Brämer, Patrick & Gischer, Horst & Richter, Toni & Weiß, Mirko, 2013. "Competition in banks’ lending business and its interference with ECB monetary policy," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 25(C), pages 144-162.
    2. Horst Gischer & Toni Richter, 2014. "Produktivitätsmessung von Banken: die Cost Income Ratio – ein belastbares Performancemaß?," FEMM Working Papers 140008, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.

    More about this item


    Competition; European Banking; NEIO; Risk; SCP; Stability;


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