Cover IMF Working Papers
Are More Competitive Banking Systems More Stable?
Author: Mr. Martin Cihakhttps://orcid.org/0000-0002-3571-9707, Simon Wolfe, and Mr. Klaus Schaeck
Series:
IMF Working Papers
Volume/Issue:
Volume 2006: Issue 143
Language:
English
Publication Date:
01 Jun 2006
DOI:
https://doi.org/10.5089/9781451864038.001
ISBN:
9781451864038
ISSN:
1018-5941
Pages:
37
Keywords:
WP; concentration ratio; dummy variable; terms of trade
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper provides the first empirical analysis of the cross-country relationship between a direct measure of competitive conduct of financial institutions and banking system fragility. Using the Panzar and Rosse H-Statistic as a measure for competition in 38 countries during 1980-2003, we present evidence that more competitive banking systems are less prone to systemic crises and that time to crisis is longer in a competitive environment. Our results hold when concentration and the regulatory environment are controlled for and are robust to different methodologies, different sampling periods, and alternative samples.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund