Does Bank Competition Contribute to Financial Stability?
Keywords:
Bank Competition, Financial System Stability, Market Power, Concentration, EfficiencyAbstract
The relationship between bank competition and financial system stability is indeed very complex. At present, there is still a controversial debate on the two opposing views of the relationship. Under the traditional view called competition-fragility, the hypothesis suggests that a more competitive banking system is less stable. On the contrary, under the recent view called competition-stability, the hypothesis suggests that a more competitive banking system is more stable. This paper, therefore, attempts to fill in the literature gap by using a sample of 81 countries including both developed and developing countries from 2000 to 2013. The results reveal that the relationship between bank competition and financial system stability can vary across different market characteristics, specifically when the segmentation is based on accessibility to funding via financial market and size of credit relative to a country’s GDP. These findings have significant policy implications and help to analyse the effect of competition in financial sector to its stability.
Downloads
Downloads
Published
How to Cite
Issue
Section
License
The opinions and ideas expressed in all submissions published in Thammasat Review are solely that of the author(s) and do not necessarily reflect that of the editors or the editorial board.
The copyright of all articles including all written content and illustrations belong to Thammasat Review. Any individuals or organisation wishing to publish, reproduce and distribute a particular manuscript must seek permission from the journal first.