Competition and stability in the European Union banking sector
Autor(a) principal: | |
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Data de Publicação: | 2023 |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/10400.5/27336 |
Resumo: | This paper empirically tests the two competing hypotheses regarding the relationship between competition and stability: the competition-fragility hypothesis and the competition-stability hypothesis. The banking sector stability is first proxied by the estimated Z-score that provides a measure of overall bank stability. Further, the paper separately considers some specific constituent components of the Z-score measure to analyse different aspects of the bank stability: bank profitability and bank capitalisation. Two different measures are used to represent bank competition: the Herfindahl-Hirschman Index (a specific measure of market concentration), and the Boone indicator (which measures competition from an efficiency perspective). Using data sourced from the Moody’s Analytics BankFocus database, the paper applies panel estimations to a relatively large panel including 784 relevant banks of all the 27 European Union countries, between 2006 and 2021. The main findings overall confirm the validity of the competitionfragility hypothesis. Moreover, the results obtained for two specific EU countries: Germany and France, highlight some specific differences in particular regarding the effects of bank market concentration, and the responses to the crises that affected the EU banking institutions over the considered period. The findings of this paper reinforce the relevance of the policy makers’ role and give room to some recommendations. |
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Competition and stability in the European Union banking sectorBank stabilitybank competitionZ-scoreHerfindahl-Hirschman IndexBoone indicatorEU banking sectorThis paper empirically tests the two competing hypotheses regarding the relationship between competition and stability: the competition-fragility hypothesis and the competition-stability hypothesis. The banking sector stability is first proxied by the estimated Z-score that provides a measure of overall bank stability. Further, the paper separately considers some specific constituent components of the Z-score measure to analyse different aspects of the bank stability: bank profitability and bank capitalisation. Two different measures are used to represent bank competition: the Herfindahl-Hirschman Index (a specific measure of market concentration), and the Boone indicator (which measures competition from an efficiency perspective). Using data sourced from the Moody’s Analytics BankFocus database, the paper applies panel estimations to a relatively large panel including 784 relevant banks of all the 27 European Union countries, between 2006 and 2021. The main findings overall confirm the validity of the competitionfragility hypothesis. Moreover, the results obtained for two specific EU countries: Germany and France, highlight some specific differences in particular regarding the effects of bank market concentration, and the responses to the crises that affected the EU banking institutions over the considered period. The findings of this paper reinforce the relevance of the policy makers’ role and give room to some recommendations.ISEG - REM - Research in Economics and MathematicsRepositório da Universidade de LisboaFerreira, Cândida2023-02-22T15:38:02Z2023-022023-02-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.5/27336engFerreira, Cândida (2023). "Competition and stability in the European Union banking sector". REM Working paper series, nº 0261/20232184-108Xinfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-03-06T14:56:41Zoai:www.repository.utl.pt:10400.5/27336Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T17:10:49.377895Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
Competition and stability in the European Union banking sector |
title |
Competition and stability in the European Union banking sector |
spellingShingle |
Competition and stability in the European Union banking sector Ferreira, Cândida Bank stability bank competition Z-score Herfindahl-Hirschman Index Boone indicator EU banking sector |
title_short |
Competition and stability in the European Union banking sector |
title_full |
Competition and stability in the European Union banking sector |
title_fullStr |
Competition and stability in the European Union banking sector |
title_full_unstemmed |
Competition and stability in the European Union banking sector |
title_sort |
Competition and stability in the European Union banking sector |
author |
Ferreira, Cândida |
author_facet |
Ferreira, Cândida |
author_role |
author |
dc.contributor.none.fl_str_mv |
Repositório da Universidade de Lisboa |
dc.contributor.author.fl_str_mv |
Ferreira, Cândida |
dc.subject.por.fl_str_mv |
Bank stability bank competition Z-score Herfindahl-Hirschman Index Boone indicator EU banking sector |
topic |
Bank stability bank competition Z-score Herfindahl-Hirschman Index Boone indicator EU banking sector |
description |
This paper empirically tests the two competing hypotheses regarding the relationship between competition and stability: the competition-fragility hypothesis and the competition-stability hypothesis. The banking sector stability is first proxied by the estimated Z-score that provides a measure of overall bank stability. Further, the paper separately considers some specific constituent components of the Z-score measure to analyse different aspects of the bank stability: bank profitability and bank capitalisation. Two different measures are used to represent bank competition: the Herfindahl-Hirschman Index (a specific measure of market concentration), and the Boone indicator (which measures competition from an efficiency perspective). Using data sourced from the Moody’s Analytics BankFocus database, the paper applies panel estimations to a relatively large panel including 784 relevant banks of all the 27 European Union countries, between 2006 and 2021. The main findings overall confirm the validity of the competitionfragility hypothesis. Moreover, the results obtained for two specific EU countries: Germany and France, highlight some specific differences in particular regarding the effects of bank market concentration, and the responses to the crises that affected the EU banking institutions over the considered period. The findings of this paper reinforce the relevance of the policy makers’ role and give room to some recommendations. |
publishDate |
2023 |
dc.date.none.fl_str_mv |
2023-02-22T15:38:02Z 2023-02 2023-02-01T00:00:00Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10400.5/27336 |
url |
http://hdl.handle.net/10400.5/27336 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
Ferreira, Cândida (2023). "Competition and stability in the European Union banking sector". REM Working paper series, nº 0261/2023 2184-108X |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.publisher.none.fl_str_mv |
ISEG - REM - Research in Economics and Mathematics |
publisher.none.fl_str_mv |
ISEG - REM - Research in Economics and Mathematics |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
instname_str |
Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
instacron_str |
RCAAP |
institution |
RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
collection |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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1799131205050826752 |