On the implications of market power in banking: Evidence from developing countries

Ariss, Rima Turk

doi:10.1016/j.jbankfin.2009.09.004

Cited by 543 publications

(181 citation statements)

References 46 publications

Supporting

Mentioning

163

Contrasting

Unclassified

Order By: Relevance

“…Following recent studies (Maudos and de Guevara, 2007;Casu and Girardone 2009;Turk Ariss, 2010, among many others), we estimate directly competition through the Lerner index of Monopoly Power (LER) as a measure of cooperative bank market power.…”

Section: Measuring Competition: the Lerner Indexmentioning

confidence: 99%

“…Following recent studies (Berger et al 2009 andTurk Ariss 2010) and assuming that banks produce an heterogeneous flow of services that is proportional to their dimension, we use banks' total asset as a proxy of their overall activity (Angelini and Cetorelli, 2003) and we estimate average price as total revenues (interest and non-interest income) on total asset.…”

Section: Output Price Pmentioning

confidence: 99%

“…We estimate competition using the Lerner Index of Monopoly Power, recently used in various studies (Maudos and De Guevara, 2007;Turk Ariss, 2010, Radic et al, 2011 among many others). We use panel data techniques and Generalized Methods of Moments (GMM), to control for endogeneity and country-specific effects, in order to test whether changes in competition predict variations in bank risk measures.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Competition and financial stability in European cooperative banks

Fiordelisi

Mare²

2014

Journal of International Money and Finance

233

View full text Add to dashboard Cite

Cooperative banks are a driving force for socially committed business at a local level accounting for around one fifth of the European Union (EU) bank deposits and loans. Despite their importance, little is known about the relationship between bank stability and competition for these small credit institutions. Does competition affect the stability of cooperative banks? Does banks' financial stability increase/decrease in case of higher competition? We assess the dynamic relationship between competition and bank soundness (both in the short and long run) in the European cooperative banking between 1998 and 2009. We obtain three main results. First, we support the competition-stability view proposed by Boyd and De Nicolò (2005). Bank market power negatively Granger-cause banks' soundness meaning that there is a positive relationship between competition and stability. Second, we provide evidence of the negative impact of the 2007-2009 financial crisis on the individual risk exposure of cooperative banks although it does not change the relationship between competition and stability. Third, we show that herding behaviour affects positively bank soundness. Our findings have important policy implications for designing and implementing regulations that enhance the overall stability of the financial system. JEL-Classification: C23, G21

show abstract

Section: Measuring Competition: the Lerner Indexmentioning

confidence: 99%

Section: Output Price Pmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Competition and financial stability in European cooperative banks

Fiordelisi

Mare²

2014

Journal of International Money and Finance

233

View full text Add to dashboard Cite

show abstract

“…Entre las investigaciones más recientes que presentan evidencia de una relación negativa entre competencia y calidad de cartera se encuentran las de investigadores como Berger, Klapper y Turk-Ariss (2009), Turk (2010), Maudos y Fernández de Guevara (2010). Un reciente análisis aplicado al mercado microfinanciero es el de Kumar y Bali (2014), en el que también se encuentra evidencia según la cual, más competencia en el mercado deteriora la calidad de la cartera de los microcréditos.…”

Section: Estado De La Cuestiónunclassified

Competencia y calidad de cartera en el mercado microfinanciero peruano, 2003-2015

Huaman¹,

Andía²

2016

ECONOMIA

View full text Add to dashboard Cite

RESUMENEl objetivo de este estudio es analizar la relación que existe entre la competencia y la calidad de cartera en el sector microfinanciero peruano en el periodo [2003][2004][2005][2006][2007][2008][2009][2010][2011][2012][2013][2014][2015]. Como indicador de competencia se emplea el poder de mercado estimado por el Índice de Lerner y como indicador de calidad de cartera se utiliza la tasa de morosidad. El análisis segmenta el mercado microfinanciero en tres grupos de instituciones microfinancieras (IMF), considerando el volumen promedio de sus colocaciones, de manera que, en el primer grupo se ubican las entidades con un mayor volumen promedio de colocaciones, en el segundo grupo se encuentran las entidades con un volumen medio de colocaciones y finalmente, en el tercer grupo se ubican las entidades con menor volumen promedio de colocaciones. Esta segmentación refleja la heterogeneidad de tamaño que existe entre estas entidades. Los resultados muestran un Índice de Lerner decreciente, para el primer y el tercer grupo, evidenciando una mayor competencia. En el segundo grupo, el comportamiento del Índice de Lerner muestra una tendencia creciente en los últimos meses del periodo estudiado, reflejando una menor competencia. Por otro lado, se evidencia una relación inversa entre el Índice de Lerner y la morosidad en los tres grupos, lo que implica que el aumento de competencia en el mercado microfinanciero ha generado un deterioro en la calidad de cartera crediticia. Este resultado se obtiene controlando el comportamiento de otras variables como son: el ciclo econó-mico, la expansión de los créditos, la eficiencia y la rentabilidad de las instituciones, además del efecto de la crisis financiera internacional del 2008. ABSTRACTThe aim of this study is to analyze the relationship between competition and loan portfolio quality in the Peruvian microfinance sector. To make this analysis the market is segmented into three groups of microfinance microfinance institutions IMFs), considering the average volume of its loans. So that, in the first group (large IMFs) entities of higher average volume of loans are located, in the second group (medium IMFs) entities with an average volume of loans are located and finally, in the third group (small IMFs) are entities with lower average loan volumes. This segmentation reflects the heterogeneity of size for loans between IMFs. The results show the Lerner index decreasing over time, for both the group of large IMFs and the group of small IMFs, showing a decrease of market power and increased competition in these two groups of entities. In the group of medium IMFs behavior Lerner index shows a growing trend in the last months of the period studied thus indicating a greater market power and less competition in this group of microfinance operators. On the other hand, an inverse relationship between the Lerner index over delinquency rate in the three groups of IMFs is found, implying that increased competition in the Peruvian microfinance market has deteriorated the quality of loan ...

show abstract

“…1 In the extant literature Kazakh banks have featured in a number of cross country studies on the a¤ect of …nancial development on banking e¢ ciency (e.g. Turk Ariss, 2010;De Haas et al, 2010;Fries and Taci, 2005). The …rst of these studies analyses banking e¢ ciency across 60 countries whereas the latter study uses a sample of banks in 15 countries.…”

Section: Introductionmentioning

confidence: 99%