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

Oredegbe, Abayomi

doi:10.1177/09726527211045759

Cited by 4 publications

(2 citation statements)

References 69 publications

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“…Borri and di Giorgio (2021) uncovered that during the COVID-19 pandemic, sovereign default risks greatly influenced the contribution of banks to systemic risk. Similarly, Oredegbe's (2022) research on the stability of the banking industry in BRICS and G7 countries revealed a correlation between past and future stability, lending support to the competition-stability hypothesis. This study also noted varying influences of economic growth, inefficiency, and financial factors between BRICS and G7 countries.…”

Section: Banking Market During Crisismentioning

confidence: 71%

Time-Frequency Connectedness in Global Banking: Volatility and Return Dynamics of BRICS and G7 Banks

Dammak,

Gökgöz,

Jeribi

2024

Preprint

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Addressing recent disturbances in the global financial landscape, this paper investigates volatility and return spillovers within the banking indices of BRICS and G7 countries using a time-varying parameter autoregressive model. We analyze daily bank stock indices from January 2018 to October 2023, focusing on the role of interconnectedness in shaping global financial stability, particularly during significant events. Our empirical findings shed light on the dynamic nature of volatility and return spillovers between the banking sectors of these countries. These interconnections are notably influenced by specific countries and are significantly affected by turbulent events. The connectedness among the indices shows varying patterns across different time frequencies, with short-term (1–5 days) and intermediate-long term (5 days to infinity) connectedness displaying distinct characteristics, especially during periods of global shocks. This heterogeneity underscores the complexity of financial market responses over different time horizons during crises. The study reveals that the connectedness among these indices is dynamic, showing considerable changes over time. We find that national banking indices frequently switch roles, oscillating between being net transmitters and receivers of volatility. This finding emphasizes the need to account for the varied impacts of global events on financial markets across different time frames. The research highlights the critical importance of understanding the interconnectedness in global banking markets and advocates for a dynamic approach by investors and policymakers in financial markets, stressing the necessity to adapt strategies to the continuously evolving market scenarios.

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Section: Banking Market During Crisismentioning

confidence: 71%

Time-Frequency Connectedness in Global Banking: Volatility and Return Dynamics of BRICS and G7 Banks

Dammak,

Gökgöz,

Jeribi

2024

Preprint

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“…From the above models, the dependent variable is market power, which is measured by the Lerner Index. Oredegbe (2021) used the inverse of the Lerner index to measure competition. In this study, we apply the economic procedure of Delis (2012) and Brissimis and Delis (2014), we do not include here all the technical details for the estimation process, but we provide a brief definition of the Lerner Index.…”

Section: Methodology and Datamentioning

confidence: 99%

Central Bank Policies and Market Power Over the Business Cycle in Africa

Ofori‐Sasu

Agbloyor

Kuttu

et al. 2022

Journal of Emerging Market Finance

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This article empirically examines the impact of the business cycle on the relationship between individual central bank policies and market power. We present a representative sample of 52 African economies over the period 2006–2018. We find that monetary, macro-prudential and central bank independence policies increase market power. The study found that, in the long run, market power reacts positively to changes or adjustments made to a central bank policy framework. We show that the individual central bank’s policy framework increase market power, when interacted with business cycle. JEL Codes: E3, E5, E61, G21, L10, L51, M21

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Determinants of banking stability in India

Kaur,

Kaur

2024

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Purpose This study aims to examine the various internal and external factors affecting the financial stability of Indian Commercial Banks. The aim is to improve the effectiveness of the Indian banking system in facilitating the transmission of monetary policy and to strengthen its resilience in the event of a banking crisis. Design/methodology/approach A panel data regression analysis is employed on unbalanced panel data of Indian commercial banks including public sector, private sector and foreign sector banks for the period of 2005–2022. Findings This study revealed that Indian banks with higher profits and high capitalization are more stable than others. However, banks with large bank size and high management costs are less stable as compared to other banks. In the case of macroeconomic variables, foreign exchange reserves have a significant positive impact on banking stability. Moreover, the unemployment rate has a significant negative impact on the banking stability of India. Research limitations/implications Research identifies relevant micro and macroeconomic drivers pertaining to India’s banking stability, a developing economy. These findings have significant implications and can attract the attention of analysts, regulators, bankers and academicians in this area. Nevertheless, the scope of the study is limited to the variables chosen to evaluate their contribution to banking stability, but other variables may influence Indian banking conditions. Practical implications Indian banks are advised by the research to place a high priority on profitability, capitalization and effective risk management. Customers and investors should choose banks with strong metrics. The priorities for policymakers should be preserving robust reserves and tackling unemployment with focused initiatives. Adopting digitalization can improve banks’ customer service and operational effectiveness, which is important for overcoming economic obstacles. These tactics provide doable measures to improve the resilience and stability of the banking industry in India and other emerging nations. Originality/value This research differentiates from the rest by focusing solely on the Indian banking system, in contrast to previous ones that often treated India as part of a bigger part like the BRICS or South Asia continent. It acknowledges the need to comprehending the unique traits and difficulties faced by the Indian banking system. Moreover, the current study distinguishes itself by focusing on the combined impact of microeconomic and macroeconomic indicators in the Indian context, unlike earlier research that concentrated on assessing the effects of individual variables. The current study also investigated new variables like corporate governance and foreign exchange reserves in the context of Indian banking which have not been explored by existing literature. Research is also crucial in the context of the analysis’s time frame, since it captures the period of economic transformation that included demonization, implementation of GST, major mergers and global COVID-19 pandemic.

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

Cited by 4 publications

References 69 publications

Time-Frequency Connectedness in Global Banking: Volatility and Return Dynamics of BRICS and G7 Banks

Time-Frequency Connectedness in Global Banking: Volatility and Return Dynamics of BRICS and G7 Banks

Central Bank Policies and Market Power Over the Business Cycle in Africa

Determinants of banking stability in India

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