The nonlinear relationship between banks competition and financial stability in China

Hou, Shehong

doi:10.1080/13504851.2021.1985065

Cited by 5 publications

(5 citation statements)

References 9 publications

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“…González (2023) investigates the effect of creditor rights on bank competition and stability. Hou (2023) investigates the effect of bank competition in determining bank stability in China. The author finds that there is an optimal competition level.…”

Section: Literature Review Theoretical Frameworkmentioning

confidence: 99%

Determinants of Bank Stability in Nigeria

Aniemeke

2024

Am. J. Econ. Bus. Innov.

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The paper examines the determinants of bank stability in Nigeria over the 2000 to 2021 period. The analysis was conducted using the ZSCORE as the measure of bank stability in Nigeria alongside the regulatory capital ratio, cost-to-income, non-performing loans, loan-to-deposit, bank concentration, and the share of domestic private credit to GDP as the determinants of bank stability. The model was estimated using the time-series ordinary least square regression method. The results show that the regulatory capital ratio, cost-to-income, non-performing loans, loan-to-deposit, bank concentration, and the share of domestic private credit to GDP are all significant determinants of bank stability in Nigeria. More specifically, regulatory capital ratio, cost-to-income ratio, non-performing loans, and domestic private credit are negative measure of bank stability, while loan-to-deposit ratio and bank concentration are positive determinants of bank stability in Nigeria.

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Section: Literature Review Theoretical Frameworkmentioning

confidence: 99%

Determinants of Bank Stability in Nigeria

Aniemeke

2024

Am. J. Econ. Bus. Innov.

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“…Specifically [ 48 ], demonstrate that a bell-shaped non-linear relationship between competition and financial stability emerges from the chance of bankruptcy increasing but then decreasing after a certain amount of banking rivalry occurs. The authors state that the hypothesis of "competition—fragility" is accepted when bank competition is beyond ideal and that the hypothesis of "competition—stability" holds when the amount of competition does not exceed the optimal [ [49] , [50] , [51] ]. Studies by Ref.…”

Section: Literature Reviewmentioning

confidence: 99%

Financial inclusion, competition and financial stability: New evidence from developing economies

Antwi,

Kong,

Gyimah

2024

Heliyon

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“…Financial inclusion lowers credit risk in SSA countries and enhances bank profitability in LAC countries (Jungo et al 2022). Hou (2023) examined how competition between banks in China affects financial stability using different GMM methods. Hou (2023) also showed that China's banking system has an ideal level of competition.…”

Section: Competition and Financial Stabilitymentioning

confidence: 99%

“…Hou (2023) also showed that China's banking system has an ideal level of competition. The stock market crash of 2015 did not significantly affect banks' Z-scores, but it did make it clear that nonperforming loans went up (Hou 2023). Cantah et al (2023) used the Z-score and the NPL ratio as proxies for financial sector stability; Ghana's financial industry is more stable with more substantial market power (low competition) (whether Z-score or NPL) (Cantah et al 2023).…”

Section: Competition and Financial Stabilitymentioning

confidence: 99%

“…A higher Z-score value indicates higher stability, resulting in reduced risk. The Z-score is calculated as a return on assets plus equity divided by the total assets divided by the standard deviation of the return on assets: symbolically, ROA + (Equity/Total assets)/standard deviation of return on assets (Moudud-Ul-Huq et al 2022, 2023.…”

Section: Competition and Financial Stabilitymentioning

confidence: 99%

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The Nexus of Banks’ Competition, Ownership Structure, and Economic Growth on Credit Risk and Financial Stability

et al. 2023

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The main object of this research is to find out the nexus of banks’ competition, ownership structure, and economic growth on credit risk and financial stability. In addition, it examines the level of financial stability, economic growth, and ownership structure in the Middle East and North African (MENA) economies. The generalized method of moments (GMM) method was used to examine this study. The study used an unbalanced panel dataset from 2011 to 2021 in MENA countries. This research demonstrates a negative relationship between economic growth, credit risk, and financial stability in MENA economies; nevertheless, it proves an insignificant effect among them. It also shows that the lower the level of bank competition, the lower the level of bank risk taking, and the better the level of financial stability. It further found that market competition and bank ownership structure had a homogenous effect on financial stability when looking at the impact of competition and bank ownership structure. In the long-term sense, the square term of competition is highly favorable with financial stability models ((Lerner square × Islamic banks), (Lerner square × commercial banks), (Lerner square × specialized government institutions)). However, financial stability improves with time, as seen by the competition square term bank ownership structure (a square measure of competition) with the Lerner index (LI) and the Herfindahl–Hirschman index total assets (HHIA). This finding of the square measure of competition is supported by competition stability theory. However, this study also proved that Islamic and commercial banks are less vulnerable to credit risk than specialized government institutions (SGI). This study scrutinized how MENA economies can remain stable through banking competition. This study builds a new brand of literature review. As a result, this research gives MENA policymakers better ideas for making policies that help the banking environment.

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The nonlinear relationship between banks competition and financial stability in China

Cited by 5 publications

References 9 publications

Determinants of Bank Stability in Nigeria

Determinants of Bank Stability in Nigeria

Financial inclusion, competition and financial stability: New evidence from developing economies

The Nexus of Banks’ Competition, Ownership Structure, and Economic Growth on Credit Risk and Financial Stability

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