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The Conditional Effects of Market Power on Bank Risk--Cross-Country Evidence

Forssbaeck, Jens LU and Shehzad, Choudhry Tanveer (2015) In Review of Finance 19(5). p.1997-2038
Abstract
We investigate the relationship between market power and risk for a large panel of banks worldwide. Loan and deposit market power are measured separately at bank-year level, and the risk effect of market power is conditioned on several factors predicted by theory. Both loan and deposit market power have a stable, monotonically negative effect on risk, irrespective of risk measure. The effect is larger for asset risk, and is independent of charter value and capital ratios. The effect on default risk tends to decrease in the quality of banking regulation, whereas the conditioning effects of deposit insurance protection are mixed.
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
in
Review of Finance
volume
19
issue
5
pages
1997 - 2038
publisher
Oxford University Press
external identifiers
  • wos:000361320200007
  • scopus:84941662564
ISSN
1572-3097
DOI
10.1093/rof/rfu044
language
English
LU publication?
yes
id
e1848c73-8771-4a35-b7ab-96b05094a286 (old id 4864401)
alternative location
http://rof.oxfordjournals.org/content/early/2014/10/20/rof.rfu044.short?rss=1
date added to LUP
2014-12-17 11:29:41
date last changed
2017-09-24 03:18:51
@article{e1848c73-8771-4a35-b7ab-96b05094a286,
  abstract     = {We investigate the relationship between market power and risk for a large panel of banks worldwide. Loan and deposit market power are measured separately at bank-year level, and the risk effect of market power is conditioned on several factors predicted by theory. Both loan and deposit market power have a stable, monotonically negative effect on risk, irrespective of risk measure. The effect is larger for asset risk, and is independent of charter value and capital ratios. The effect on default risk tends to decrease in the quality of banking regulation, whereas the conditioning effects of deposit insurance protection are mixed.},
  author       = {Forssbaeck, Jens and Shehzad, Choudhry Tanveer},
  issn         = {1572-3097},
  language     = {eng},
  number       = {5},
  pages        = {1997--2038},
  publisher    = {Oxford University Press},
  series       = {Review of Finance},
  title        = {The Conditional Effects of Market Power on Bank Risk--Cross-Country Evidence},
  url          = {http://dx.doi.org/10.1093/rof/rfu044},
  volume       = {19},
  year         = {2015},
}