Competition and risk in Japanese banking

Liu, Hong; Wilson, John O. S.

doi:10.1080/1351847x.2011.633614

Cited by 93 publications

(58 citation statements)

References 41 publications

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“…This contrasts with previous evidence that foreign banks contribute to credit market stabilization in their host markets (see Haselmann, 2006;de Haas & van Lelyveld, 2006, 2010. Fungáčová et al (2010) for the Russian banking sector, Agoraki et al (2011) for the Central and Eastern European banking sectors, Fang et al (2011) for the banking sectors of South-Eastern Europe, Maudos & Solis (2011) for the Mexican banking sector, and Liu & Wilson (2012) for the Japanese banking industry.…”

Section: Estimation Of the Lerner Indexmentioning

confidence: 99%

“…◮ Operational inefficiency ('Inefficiency') proxied by non-interest expenses to total revenues following the common practice in the literature (see Fernández de Guevara et al, 2005;Liu & Wilson, 2012).…”

Section: Market Power Model Specificationmentioning

confidence: 99%

“…Finally, the previous period's Lerner index is included among the explanatory variables to capture persistence over time, which is an important determinant of bank profitability and risk (Goddard et al, 2004;Liu & Wilson, 2012).…”

Section: Market Power Model Specificationmentioning

confidence: 99%

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Market power in CEE banking sectors and the impact of the global financial crisis

Efthyvoulou

Yıldırım

2014

Journal of Banking & Finance

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Article available under the terms of the CC-BY-NC-ND licence (https://creativecommons.org/licenses/by-nc-nd/4.0/) eprints@whiterose.ac.uk https://eprints.whiterose.ac.uk/ Reuse Unless indicated otherwise, fulltext items are protected by copyright with all rights reserved. The copyright exception in section 29 of the Copyright, Designs and Patents Act 1988 allows the making of a single copy solely for the purpose of non-commercial research or private study within the limits of fair dealing. The publisher or other rights-holder may allow further reproduction and re-use of this version -refer to the White Rose Research Online record for this item. Where records identify the publisher as the copyright holder, users can verify any specific terms of use on the publisher's website. TakedownIf you consider content in White Rose Research Online to be in breach of UK law, please notify us by emailing eprints@whiterose.ac.uk including the URL of the record and the reason for the withdrawal request. AbstractThe aim of this study is to undertake an up-to-date assessment of market power in Central and Eastern European banking markets and explore how the global financial crisis has affected market power and what has been the impact of foreign ownership. Three main results emerge. First, while there is some convergence in country-level market power during the pre-crisis period, the onset of the global crisis has put an end to this process. Second, bank-level market power appears to vary significantly with respect to ownership characteristics. Third, asset quality and capitalization affect differently the margins in the pre-crisis and the crisis periods. While in the pre-crisis period the impacts are similar for all banks regardless of ownership status, in the crisis period non-performing loans have a negative effect and capitalization a positive effect only for domestically-owned banks.

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Section: Estimation Of the Lerner Indexmentioning

confidence: 99%

Section: Market Power Model Specificationmentioning

confidence: 99%

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Market power in CEE banking sectors and the impact of the global financial crisis

Efthyvoulou

Yıldırım

2014

Journal of Banking & Finance

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“…Thereby, our study contributes to the literature in the following ways. First, whereas the current literature has mostly used the bank‐specific Lerner index or aggregate Boone indicator as a proxy for competition (Liu & Wilson, ; Schaeck & Cihák, ), we estimate bank level Boone indicators. We use local regression techniques to calculate the Boone indicator for each bank‐year observation.…”

Section: Introductionmentioning

confidence: 99%

The interplay between quantitative easing, risk and competition: The case of Japanese banking

Mamatzakis

2018

Financial Market

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“…With regard to the former, a small selection includes Levonian (1993), Roland (1997) and Berger et al (2000) for the US, Goddard et al (2004Goddard et al ( , 2010 for Europe and Liu and Wilson (2013) for Japan, while, Goddard et al (2013) examine a range of markets. With regard to the literature more closely related to this paper, Boyd and Runkle (1993) argue that there exists a negative relationship between earnings volatility and bank size for US bank holding companies, while Stiroh (2004) argues that no such relationship exists.…”

Section: Introductionmentioning

confidence: 99%

The Interaction between Risk, Return-Risk Trade-Off and Complexity: Evidence and Policy Implications for US Bank Holding Companies

McMillan

2015

SSRN Journal

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This paper examines two aspects of bank risk with a particular emphasis on examining the interaction between them. Moreover, throughout the analysis we differentiate between non-complex and complex banks, the latter of which could be seen as holding a further level of risk. We wish to establish how these risk behaviours interact with bank specific, market structure and economic factors. Key results indicate that earnings volatility (business risk) increases with market power but decrease with size and output. While risk-taking (managerial risk) decreases with market power and increases with size and output. Furthermore, in examining return per unit of risk, results demonstrate that increase return and risk-taking is associated with bank specific factors and the economic environment, whereas decreased risk taking is associated with market structure. This suggests a management of risk, which increases around factors under bank control or improving external environment but decreases with the interaction of competitors. Overall, the results suggest that policy should focus on liquidity and equity buffers that should operate countercyclicality but size and market structure per se are not determining factors for higher risk. In terms of the recent financial crisis, it is likely that the great moderation that proceeded it lead to higher risk-taking due to higher economic growth but without the necessary buffers being built up. Abstract This paper examines two aspects of bank risk with a particular emphasis on examining the interaction between them. Moreover, throughout the analysis we differentiate between non-complex and complex banks, the latter of which could be seen as holding a further level of risk. We wish to establish how these risk behaviours interact with bank specific, market structure and economic factors. Key results indicate that earnings volatility (business risk) increases with market power but decrease with size and output. While risk-taking (managerial risk) decreases with market power and increases with size and output. Furthermore, in examining return per unit of risk, results demonstrate that increase return and risk-taking is associated with bank specific factors and the economic environment, whereas decreased risk taking is associated with market structure. This suggests a management of risk, which increases around factors under bank control or improving external environment but decreases with the interaction of competitors. Overall, the results suggest that policy should focus on liquidity and equity buffers that should operate countercyclicality but size and market structure per se are not determining factors for higher risk. In terms of the recent financial crisis, it is likely that the great moderation that proceeded it lead to higher risk-taking due to higher economic growth but without the necessary buffers being built up.

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Competition and risk in Japanese banking

Cited by 93 publications

References 41 publications

Market power in CEE banking sectors and the impact of the global financial crisis

Market power in CEE banking sectors and the impact of the global financial crisis

The interplay between quantitative easing, risk and competition: The case of Japanese banking

The Interaction between Risk, Return-Risk Trade-Off and Complexity: Evidence and Policy Implications for US Bank Holding Companies

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