Does efficiency play a transmission role in the relationship between competition and stability in the banking industry? New evidence from South Asian economies

Alvi, Muhammad Amir; Akhtar, Kalsoom; Rafique, Amir

doi:10.1002/pa.2678

Cited by 6 publications

(2 citation statements)

References 89 publications

(116 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…For example, lack of competition leads state-wide banks to have higher risks than regional banks and credit cooperatives (Liu & Wilson 2012). Increased competition decreases risk at the level of state banks and increases risk at regional banks (Alvi et al 2021).…”

Section: Risk-stabilitymentioning

confidence: 99%

Competitiveness in Banking Sector: A Systematic Literature Review

Begimkulov

2023

View full text Add to dashboard Cite

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.

show abstract

Section: Risk-stabilitymentioning

confidence: 99%

Competitiveness in Banking Sector: A Systematic Literature Review

Begimkulov

2023

View full text Add to dashboard Cite

show abstract

“…Existing theoretical and empirical studies on bank concentration, competition, and financial stability nexus remain complex and a subject of interest to the policymakers and regulators (Allen & Gale, 2004;Beck et al, 2006;Boyd et al, 2006;Fu et al, 2014;Schaeck & Cihák, 2014;Goetz, 2018;Davis et al, 2020;Alvi et al, 2021). Two strands of theories have been propounded to explain the bank behavior, which has generated mixed and inconclusive findings.…”

Section: Introductionmentioning

confidence: 99%

The Trade-off between Bank Concentration and Competition on Financial Stability within the East African Community

Nyangu¹,

Marwa²,

Fanta³

et al. 2021

Preprint

View full text Add to dashboard Cite

This paper examines bank concentration, competition, and financial stability nexus across five emerging countries (Kenya, Tanzania, Uganda, Rwanda & Burundi) within the East African Community (EAC). The methodological approach applied provides a critical and original contribution to the existing literature by testing the various theories explaining the relationships between bank concentration, competition, and stability. A two-step system Generalised Methods of Moments (GMM), is employed on a sample of 149 banks with 1,805 annual observations over the period 2001–2018. The findings reveal that high concentration and low competition lead to more financial stability and less probability of bank default risk. In addition, a non-linear relationship between competition and stability is not observed, revealing that greater competition undermines bank stability and makes banks more vulnerable to default risk. The findings thus lend to support the concentration-stability hypothesis that greater market power leads to more bank stability even after controlling for bank-specific, industry, and macroeconomic variables. The findings provide a significant policy contribution on the trade-off between bank concentration and competition, and the evaluation of financial stability.

show abstract