Banking Bigness: Concentration of the World’s 50 Largest Banks

Abstract

Industrial concentration is broadly defined as: a few firms controlling a substantial share (assets, revenues) of the market. In the banking sector, this paper shows that the largest 50 banks in the world control about 50 percent of assets of the largest 1,000 banks. Two well known indexes of concentration were used (the Herfindahl and Theil’s entropy) to check the levels of concentration between 1990 and 2002. For purposes of robustness, the world’s largest 100 banks were also investigated. It was found in both cases that the concentration in 2002 was statistically significant as compared to concentration in the previous decade

Impact of Financial Sector Opacity on the Capital Structure Choice of Asian Banks

“…Model 4 tests the effect using industry bank concentration by means of the Herfindahl index (HHI). Working from Nissan and Niroomand's (2006) hypothesis that a higher concentration of firms in the market will reduce the information asymmetry, the Herfindahl index is calculated for commercial banks only. Lower information asymmetry, due to a higher concentration, leads to higher leverage and lower capital positions, as was proposed by Miles (1995).…”

“…Herfindahl is the proxy for the concentration of banks in a country and is a country specific variable. Nissan and Niroomand (2006) use the Herfindahl index as a proxy. They argue that an increased concentration of firms in the market will reduce the asymmetry of information.…”

Determinants of discretionary fair value measurements: the case of Level 3 assets in the banking sector

“… Nissan and Niroomand () show that the largest 50 banks in the world control about 50 percent of assets in the banking sector (the largest 1,000 banks). Similarly, The Banker finds that the top 25 banks represent 37.06 percent of total assets from the largest 1,000 banks (Peng, ).…”