Financial sector transparency, financial crises and market power: Across‐countryevidence

Abstract

The study investigates how financial sector transparency moderates the influence of financial crises on bank market power across seventy-five economies between 2004 and 2014. Employing two-step dynamic system generalized method of moments the study shows that while public sector-led financial sector transparency reduces bank market power, private sector-led financial sector transparency promotes bank market power given that private sector-led transparency gives financial cost advantage to financially sound banks to solidify the market power and dominance. Similarly, while financial crises reduce the market power of banks implying that during financial crises banks lose their market power, financial sector transparency promotes the negative effect of financial crises on bank market power. This implies that during financial crises, financial sector transparency whether enforced through private or public sector, boosts the weakening effect of financial crises on bank market power. These findings imply that regulators can rely on financial transparency to tame bank market power to enhance banking competitiveness. The findings and results are consistent even when country, time and continental effects are controlled for.

Asymmetric impacts of geopolitical risk on stock markets: A comparative analysis of the E7 and G7 equities during the Russian-Ukrainian conflict

“…The gradual economic recovery from the systemic shocks of the still ongoing COVID-19 health crisis with the apogee in March 2020 [ 1 ], has been constrained by Russia's invasion of Ukraine on 24-Feb-2022. 1 This invasion has culminated in a heated geopolitical conflict whose repercussion has spilt over different markets and economies worldwide [ [2] , [3] , [4] , [5] , [6] ]. Due to their intensity, the consequences of the Russian-Ukrainian conflict have been likened to war events.…”

What drives bank lending? A closer look at bank lending types in Africa

“…Following the literature on banking market transparency (Kusi et al. , 2020a, b; Asongu, 2017; Hyytinen and Takalo, 2002), banks advance more credit in transparency markets or sectors of an economy while reducing credit to opaque markets and sectors. Hence, intuitive reasoning suggests that improvement in business disclosure improves transparency in the corporate and commercial sector and hence attracts more corporate and commercial loans.…”

Impacts of financial openness on economic complexity: Cross‐country evidence

“…As the dynamic model now contains the lag variables of ECI, our models may suffer from severe endogenous problems if we use traditional estimation strategies. Other empirical studies have employed the GMM method to avoid reverse causality problems in country panel studies (Kusi, Agbloyor, Gyeke‐Dako, & Asongu, 2020). In this light, this paper will employ two‐step SGMM and two‐step DGMM approaches for model estimation as they do not assume homoscedasticity and are more efficient in overcoming potential econometric problems, especially the potential endogeneity resulted from reverse causality (Ganda, 2019).…”