Bank market power after a banking crisis: Some international evidence

Cubillas, Elena; Suárez, Nuria

doi:10.1016/j.srfe.2013.04.001

Cited by 15 publications

(19 citation statements)

References 47 publications

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“…They can reduce costs and increase market share and margins after the crisis (Berger, 1995). Following these arguments and by using a sample of 64 countries and 66 episodes of banking crises during the 1989-2007 period, Cubillas and Suárez (2013) provide empirical evidence on the increase in bank market 1 The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation providing deposit insurance to depositors in US banks. 2 In order to clarify the specific relevance of both bank capital and liquidity on the reduction in credit supply during the GFC, we perform a robustness test on our international sample of banks.…”

Section: Banking Crises: Real Effects and Effects On Bank Market Powermentioning

confidence: 99%

“…In our research we go one step further and examine how the GFC affected growth in net bank loans and how this effect could be related to changes in the level of bank market power after the onset of the crisis episode. The restructuring of banking sectors during crises involving the shutdown, merger or acquisition of failed banks may increase the market power of the surviving banks (Laeven and Valencia, 2008;Wheelock, 2011;Cubillas and Suárez, 2013). In periods of crises and relying on the argument of high information asymmetries, banks would only have incentives to lend to borrowers with whom they have a longstanding lending relationship.…”

Section: Introductionmentioning

confidence: 99%

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Bank market power and lending during the global financial crisis

Cubillas

Suárez

2018

Journal of International Money and Finance

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This research examines how the Global Financial Crisis (GFC) affected banks' supply of credit, not only in a direct way but also indirectly through changes in bank market power. We use a sample of 735 banks from 17 countries during the 2003-2012 period. We find that the direct negative impact of the GFC on banks' supply of loans is counteracted by an indirect effect through the increased level of bank market power in the years after the onset of the crisis. This result is particularly relevant in countries with less stringent restrictions on bank activities and less supervisory power.

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Section: Banking Crises: Real Effects and Effects On Bank Market Powermentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Bank market power and lending during the global financial crisis

Cubillas

Suárez

2018

Journal of International Money and Finance

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“…However, most important econometric concerns in analyzing banking data are dynamic nature of bank variables, heteroscadasticity and endogeneity of some exogenous variables (Liu et al, 2014;Schaeck & Cihák, 2014). Therefore, in order to handle the potential dynamic nature of explanatory variables we have also used GMM (Generalized Methods of Moments) as it can also consider econometric concerns for unobserved bank level heterogeneity, potential endogeneity and autoregressiveness in the data on the behavior of dependent variables (Cubillas & Suárez, 2013). We particularly use a two-step GMM system and specify the robust estimator of the variance-covariance matrix which is an alternative of GMM www.ccsenet.org/ijbm…”

Section: Model Specificationmentioning

confidence: 99%

The Effect of Bank Specific and Macroeconomic Determinants of Banking Profitability: A Study on Bangladesh

Noman¹,

Chowdhury²,

Chowdhury³

et al. 2015

IJBM

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The study designed to investigate bank specific and macroeconomic determinants of profitability considering 299 observations of 35 banks in Bangladesh during 2003 to 2013. The investigation process considers all types of local Bangladeshi banks, OLS fixed effect and two step system GMM model. The results report that credit risk, cost efficiency, GDP growth and real interest rate effects profitability negatively; and capital adequacy, liquidity, size, inflation and stock market turnover effect profitability positively. The results further find that both development banks and private commercial banks are more profitable than public commercial banks in Bangladesh. Furthermore, the study finds that ROAA is most preferred measure of profitability. The study formulates some significant policy implications for improving the profitability of the banking sector of Bangladesh.

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“…Again, while market power appears to vary significantly with respect to ownership features, pre-crisis period impacts are the same for all banks regardless of ownership features. More so, Cubillas and Suárez (2013) analysed the effect of banking crises on bank market power across 64 countries and 66 episodes of banking crises between 1989 and 2007. They provide bank-level and country-level evidence that after a systematic banking crisis, there is an increased level of bank market power consistent with higher levels of bank market concentration.…”

Section: Empirical Literature Reviewmentioning

confidence: 99%

“…Bank diversification according to Cubillas and Suárez (2013) can be used to proxy for specialization as it is the direct opposite of diversification. Measured as non-interest income to total income, a lower value implies high specialization leading to increased bank market power.…”

Section: Bank Diversification (Bank-div)mentioning

confidence: 99%

Financial sector transparency, financial crises and market power: A cross‐country evidence

et al. 2020

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The study investigates how financial sector transparency moderates the influence of financial crises on bank market power across seventy-five economies between 2004 and 2014. Employing two-step dynamic system generalized method of moments the study shows that while public sector-led financial sector transparency reduces bank market power, private sector-led financial sector transparency promotes bank market power given that private sector-led transparency gives financial cost advantage to financially sound banks to solidify the market power and dominance. Similarly, while financial crises reduce the market power of banks implying that during financial crises banks lose their market power, financial sector transparency promotes the negative effect of financial crises on bank market power. This implies that during financial crises, financial sector transparency whether enforced through private or public sector, boosts the weakening effect of financial crises on bank market power. These findings imply that regulators can rely on financial transparency to tame bank market power to enhance banking competitiveness. The findings and results are consistent even when country, time and continental effects are controlled for.

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Bank market power after a banking crisis: Some international evidence

Cited by 15 publications

References 47 publications

Bank market power and lending during the global financial crisis

Bank market power and lending during the global financial crisis

The Effect of Bank Specific and Macroeconomic Determinants of Banking Profitability: A Study on Bangladesh

Financial sector transparency, financial crises and market power: A cross‐country evidence

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