Competition-Stability Relationship in Dual Banking Systems: Evidence From Efficiency-Adjusted Market Power

Khattak, Mudeer Ahmed; Alaeddin, Omar; Abojeib, Moutaz

doi:10.1142/s0217590820420096

Cited by 7 publications

(3 citation statements)

References 26 publications

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“…These results hold for both bank types. Similar results were reported by Khattak, Alaeddin, and Abojeib (2022). Khattak and Ali (2021), focusing on the banking sector of Middle Eastern countries, also conclude that the lower competitive conditions are better for banking stability.…”

Section: Introductionsupporting

confidence: 92%

Competition, stability, and institutional environment: The case of dual banking economies

Azmi¹,

Anwer

Ali

et al. 2022

Int. J Fin Econ

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We measure the impact of competition and institutional quality on stability for dual banking economies. Our sample comprises 492 banks (109 Islamic and 383 conventional banks) from 17 countries with dual‐banking systems. The sample period is from 2005 to 2020. The estimations are performed using Two Step System Generalized Method of Moments approach. Our findings reveal heterogeneous effect of competition on stability. We found the evidence of competition‐stability paradigm in case of full sample as well as for Islamic banks. There is no effect of competition on the stability of conventional banks. Furthermore, there is no evidence of size effect in the competition‐stability results. The impact of legal institution is insignificant. We also observe that better quality of political and the economic institutions increases the bank stability. We attribute these findings to the conjecture that better political and/or legal institutions improve bank stability by reducing information asymmetry and adverse selection. Finally, we find the evidence that political, legal and economic dimensions of institutions have differential effect on competition‐stability relationship. The findings are robust to alternative definitions of competition, stability and different methodological approaches.

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Section: Introductionsupporting

confidence: 92%

Competition, stability, and institutional environment: The case of dual banking economies

Azmi¹,

Anwer

Ali

et al. 2022

Int. J Fin Econ

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show abstract

“…Some scientists claim that lack of competition in the banking sector leads to the fragility of the financial system, with banks charging higher interest rates and taking on more risk (Akande et al 2018, Cuestas et al 2020, López-Penabad et al 2021. Another part claims that banking systems with fewer banks are more stable (Allen & Gale 2004, Jiménez et al 2013, Leroy & Lucotte 2017, Khattak et al 2022.…”

Section: Risk-stabilitymentioning

confidence: 99%

“…The Hungarian Journal of Marketing and Management tes have more market power than traditional banks, while in non-Islamic states, it is the opposite (Kabir Hassan et al 2021, Khattak et al 2022, (Risfandy et al 2022. Also, the relationship between competition and the market power of banks depends on the level of regulation.…”

Section: Marketing and Menedzsmentmentioning

confidence: 99%

Competitiveness in Banking Sector: A Systematic Literature Review

Begimkulov

2023

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THE AIMS OF THE PAPER The concept of bank competitiveness has attracted increasing scientific attention. The current paper explores the directions and trends of research on bank competitiveness measures by reviewing recently published journal articles. METHODOLOGY The research follows the systematic literature review method. First, a set of keywords were defined. Then, the keywords were combined with the Boolean operator “AND” to identify articles in the two biggest scientific databases: Web of Science and Scopus. The identified papers were filtered and screened following the PRISMA method of selection. At the final stage, 33 articles were included. MOST IMPORTANT RESULTS Based on the analysis of published papers, the author identified the main research streams within bank competitiveness:risk-stability, market power, macroeconomic context, information technology, and new applications. Also, within the context of growing digitalization, little attention is paid to the influence of information technology on bank competitiveness. RECOMMENDATIONS Within the context of the growing importance of technological innovations in the financial sector (e.g., financial technology startups), there is still a lack of research on the influence of technological innovations implemented by banks on their competitiveness. Also, considering that the existing methods of measuring competitiveness in banks often provide conflicting information, developing new ways of estimating competitiveness considering the level of digitalization is necessary.

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Interlinkages between stability, carbon emissions and the ESG disclosures: Global evidence from banking industry

Ali,

Azmi,

Kowsalya

et al. 2023

Pacific-Basin Finance Journal

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Competition-Stability Relationship in Dual Banking Systems: Evidence From Efficiency-Adjusted Market Power

Cited by 7 publications

References 26 publications

Competition, stability, and institutional environment: The case of dual banking economies

Competition, stability, and institutional environment: The case of dual banking economies

Competitiveness in Banking Sector: A Systematic Literature Review

Interlinkages between stability, carbon emissions and the ESG disclosures: Global evidence from banking industry

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