Banking Sector Reform, Competition, and Bank Stability: An Empirical Analysis of Transition Countries

Li, Shaofang

doi:10.1080/1540496x.2018.1540349

Cited by 23 publications

(17 citation statements)

References 59 publications

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“…Despite Shirai (2002)’s reform recommendation, ur Rehman et al (2016) revealed a partial privatization of state-owned banks in China, yet the performance of the banks improved with sound financial outcomes. Consistent with Li’s (2019) study using data from 22 transition countries mainly in Europe, banks experienced improved financial stability after banking sector reforms. Also, Ye et al (2019) revealed that the reform in 2002 increased the support of registered banks from 1998 to 2008 for the growth of smaller and younger firms in China.…”

Section: Literature Reviewsupporting

confidence: 79%

“…One way out in developing countries is a prudential approach to supervision and surveillance enforcing banking reforms by the government (Kamasa et al , 2020; Shaikh et al , 2017). Analysis using data from 22 transition countries mainly in Europe revealed that rigid enforcement should be avoided because it increases the risk of insolvency in banks with higher market power (Li, 2019). Beyond economic impacts, banking sector reforms in Pakistan were found to have led to the emergence of digital banking culture with the increasing operation of branchless banking in the country (Shaikh et al , 2017).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Beyond economic impacts, banking sector reforms in Pakistan were found to have led to the emergence of digital banking culture with the increasing operation of branchless banking in the country (Shaikh et al , 2017). Also, in Kyrgyzstan, a transition country based on the classification in Li (2019), reforms boosted public confidence in the banking sector; and foreign participation was found to have reduced bank deposit rates (Brown et al , 2009). However, reforms did not increase the spread of banks in the country.…”

Section: Literature Reviewmentioning

confidence: 99%

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Impact of the banking sector reform in the construction sector

Saka

Olanipekun

2021

JFMPC

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Purpose Banking sector reforms can impact the development of the real sector. However, there is very little known about this impact on the construction sector in a developing country context. This study aims to evaluate the impact of the banking sector reform on the construction output (CNS) using the banking sector reform in Nigeria in 2005 (2005 Banking Sector Reform Programme [BSRP]) as a case. Design/methodology/approach This study used econometric methodology comprising unit root test for stationarity, Johansen test for cointegration, analysis of variance (ANOVA) and the analysis of covariance. Time series data covering a period from 1981 to 2017 (37 years) about the banking and construction sector performances are analyzed using ten-time series equations. Findings The ANOVA estimates reveal that the 2005 BSRP positively impacted the CNS and construction sector growth rate. However, the ANOVA estimates reveal that the gross domestic product (GDP) and bank total loan had a positive impact on CNS in the period (1981–2017) before and after the 2005 BSRP, and consequently removing the effect of the 2005 BSRP on CNS. Practical implications This paper concludes that the banking sector reform has a positive impact on CNS in the Nigerian construction industry. The impact is greater and lasting when the reform is directly targeted at improving CNS. Originality/value This study provides empirical evidence of the dependence between banking sector reform and construction sector performance in a developing country context. Also, this study demonstrates the relationship between GDP, banking sector reform and construction sector performance in a developing country context.

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Section: Literature Reviewsupporting

confidence: 79%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

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Impact of the banking sector reform in the construction sector

Saka

Olanipekun

2021

JFMPC

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“…We measure banking sector depth by the growth in deposit money banks assets to GDP (DBAG), risk-taking by the non-performing loans ratio (NPL) or the provisions for non-performing loans (PNPL). We follow prior studies such as Liu et al (2012), Sarkar and Sensarma (2016), Zheng et al (2017) and Li (2019) and measure competition by the HST. This measure of competition is appropriate as it measures the elasticity of bank interest revenues to input prices (Danisman, 2018), relies on bank-level data to measure competition (Liu et al, 2012) and permits comparison across banks of different size and specializations (Claessens and Laeven, 2004).…”

Section: Methodsmentioning

confidence: 99%

Risk-taking behavior, competition, diversification and performance of frontier and emerging economy banks

Boamah

Boakye-Dankwa

Opoku

2021

AJEB

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PurposeThe study examines the dynamic association between competition, risk-taking, performance and income diversification of frontier and emerging economy (FEE) banks. It additionally, explores the effect of banking sector depth and economic performance on the level of competition, performance and risk-taking behavior of banks in these economies.Design/methodology/approachThe paper adopts a panel vector auto-regressive technique and collects data across ninety (90) FEEs.FindingsThe paper finds that competition increases with improvement in the depth of the banking sector, a surge in risk-taking behavior and the adoption of focused strategy by banks. Similarly, income diversification activities are driven by competition, banking sector depth, the state of the economy and bank performance. Additionally, risk-taking behavior, banking sector depth and the state of the economy are relevant in describing bank performance. Also, risk-taking behavior is influenced by bank performance, banking sector depth and economic growth.Originality/valueThe evidence indicates that although competition improves banking sector health, excessive competition and non-competitive banking environment constrain banks’ performance and stability.

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“…Although numerous studies have examined the industry’s stability, their outcomes are fragmented. Some (e.g., Akins et al, 2016; Allen & Gale, 2004; Boyd & De Nicolo, 2005; Fiordelisi & Mare, 2014; Kasman & Carvallo, 2014; Li, 2019; Zigraiova & Havranek, 2016) assessed the industry from competition-stability and competition-fragility standpoint. However, there are those (e.g., Ali et al, 2018; Beck et al, 2007; Hamid, 2017; Mishi et al, 2016; Rahim et al, 2019; Uhde & Heimeshoff, 2009) that utilized concentration-stability and concentration-fragility perspectives.…”

Section: Literature Reviewmentioning

confidence: 99%

Competition and Banking Industry Stability: How Do BRICS and G7 Compare?

Oredegbe

2021

Journal of Emerging Market Finance

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This study examines banking industry stability in BRICS and G7 from the period 2005 to 2014. The results show that stability level in a prior period affects stability in the subsequent period. Also, the study reveals that competition improves stability, which validates the competition-stability proposition. Economic growth enhances stability in BRICS but not in G7. Inefficiency weakens stability in BRICS; however, its impact in G7 is insignificant. Profitability, capitalization, and inflation enhance stability in G7; however, they show no meaningful impacts in BRICS. These findings contribute to literature and policy discussion on banking industry stability JEL Codes: G21, G28, G32, L11

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Banking Sector Reform, Competition, and Bank Stability: An Empirical Analysis of Transition Countries

Cited by 23 publications

References 59 publications

Impact of the banking sector reform in the construction sector

Impact of the banking sector reform in the construction sector

Risk-taking behavior, competition, diversification and performance of frontier and emerging economy banks

Competition and Banking Industry Stability: How Do BRICS and G7 Compare?

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