NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

Bank Concentration and Fragility: Impact and Mechanics

Thorsten Beck, Asli Demirguc-Kunt, Ross Levine

NBER Working Paper No. 11500
Issued in August 2005
NBER Program(s):The Corporate Finance Program, The International Finance and Macroeconomics Program

Public policy debates and theoretical disputes motivate this paper's examination of (i) the relationship between bank concentration and banking system fragility and (ii) the mechanisms underlying this relationship. We find no support for the view that concentration increases the fragility of banks. Rather, banking system concentration is associated with a lower probability that the country suffers a systemic banking crisis. In terms of policies, we find that (i) regulations and institutions that facilitate competition in banking are associated with less—not more—banking system fragility and (ii) including these policy indicators does not change the results on concentration. This suggests that concentration is a proxy for something else besides the competitive environment. Also, we do not find that official capital regulations, reserve requirements, or official prudential regulations lower crises probabilities. Finally, we present suggestive evidence that concentrated banking systems tend to have larger, better-diversified banks, which may help account for the positive link between concentration and stability.

download in pdf format
   (351 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w11500

Published:

Users who downloaded this paper also downloaded* these:
Beck Bank Concentration and Fragility. Impact and Mechanics
Demirguc-Kunt, Laeven, and Levine w9890 Regulations, Market Structure, Institutions, and the Cost of Financial Intermediation
Beck, Demirguc-Kunt, and Levine w9921 Bank Concentration and Crises
Beltratti and Stulz w15180 Why Did Some Banks Perform Better During the Credit Crisis? A Cross-Country Study of the Impact of Governance and Regulation
Mishkin w6655 Financial Consolidation: Dangers and Opportunities
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us