Does banking system transparency enhance bank competition? Cross-country evidence

This paper examines the case for efficiency-driven banking sector consolidation in Italy, evaluates its potential effects on profitability, and discusses policy options to facilitate a consolidation process that is as effective as possible. A bottom-up analysis of 386 Italian banks suggests that while profitability is expected to improve as the economy gradually recovers, operational efficiency gains are nonetheless needed to restore large parts of the banking system to healthy profitability. Banking system consolidation can play a role in facilitating such efficiency gains, but its effectiveness is likely to be most as part of a comprehensive strategy that includes complementary reforms to clean up bank balance sheets. Cross-country experience indicates that efficiency gains are more likely to follow consolidations where careful viability analyses are conducted of the synergies and operational improvements that can be achieved.

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Restructuring and Bank Performance in Dual Banking System

Signifikan Jurnal Ilmu Ekonomi ◽

10.15408/sjie.v10i2.20740 ◽

2021 ◽

Vol 10 (2) ◽

pp. 223-247

Author(s):

Raditya Sukmana ◽

Mansor H Ibrahim

Keyword(s):

Banking System ◽

Extensive Study ◽

Bank Risk ◽

Bank Performance ◽

Islamic Banking ◽

Panel Var ◽

Bank Competition ◽

Islamic Bank ◽

Conventional Banks ◽

The Impact

While extensive study deals with bank competition and performance relationship, this study pioneers in focusing the existence Islamic bank in the presence of well established conventional banking system in Malaysia. This paper assesses the impact of changing competition landscape and Islamic bank penetration on bank risk, profitability and capitalization. This study utilizes an unbalanced panel dataset consisting of 37 commercial banks over the period 1997 to 2015. the paper uses a panel VAR methodology to discern the interactions between bank competition and Islamic banking presence on one hand and bank performance on the other hand.Findings: We find evidence supportive of both competition – stability and competition – fragility views for conventional banks. The results suggest that bank competition improves conventional bank risk and, at the same time, lower profitability and capital holdings. As for Islamic banks, competition seems to robustly influence only bank profitability. Finally, we note that increasing Islamic bank penetration improves the risk profile of conventional banks and, as expected, reduces their market power. These results bear important implications on the design of competition policies in a dual banking system as well as on the development of the Islamic banking sector.JEL Classification: C23, G21, G28How to Cite:Sukmana, R., & Ibrahim, M. H.. (2021). Restructuring and Bank Performance in Dual Banking System. Signifikan: Jurnal Ilmu Ekonomi, 10 (2), 223-247. https://doi.org/10.15408/sjie.v10i2.20740.

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Bank Competition, Efficiency, and Stability in Macau

Accounting and Finance Research ◽

10.5430/afr.v8n4p157 ◽

2019 ◽

Vol 8 (4) ◽

pp. 157

Author(s):

Harry Xia ◽

Kevin Lei ◽

Jiaochen Liang

Keyword(s):

Economies Of Scale ◽

Banking Sector ◽

Banking System ◽

Bank Loans ◽

Bank Competition ◽

Income Volatility ◽

Bank Efficiency ◽

Insolvency Risk ◽

Relationship Of ◽

The Relationship

Macau has the uppermost population density and the fourth-highest GDP per capita in the world. Macau’s banking system is regarded as one of the most important indicators of Macau’s macroeconomic growth and stability during its transformation into a wealthy and modern metropolis. In this study, we use a sample of 26 banks to explore the relationship of bank competition, efficiency and stability in Macau from its return to China in 1999 to 2016. Our results demonstrate that bank competition does cause efficiency in Macau throughout the study period. We also find indications of a positive but not significant connection between bank market power and bank fragility including income volatility and insolvency risk. Moreover, this study finds no evidence that the size of operations proxied by total bank loans and total assets would impact bank efficiency, indicating that economies of scale or bank market share don’t necessarily bring about efficiency in Macau. Our evidence contributes to the literature by being the first to thoroughly examine the relation of bank competition, efficiency and stability in Macau. The findings provide meaningful implications to the practitioners and policymakers to make sound decisions accordingly, especially to closely monitor and maintain a proper level of competition in Macau’s banking sector.

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COMPETITION, RISK AND PROFITABILITY IN BANKING SYSTEM — EVIDENCE FROM VIETNAM

The Singapore Economic Review ◽

10.1142/s0217590820500137 ◽

2020 ◽

Vol 65 (06) ◽

pp. 1491-1505

Author(s):

THI HIEN NGUYEN ◽

HA GIANG TRAN

Keyword(s):

Information Technology ◽

Risk Reduction ◽

Commercial Banks ◽

Banking System ◽

Bank Competition ◽

Competition Index ◽

Data Set ◽

Bank Profitability ◽

Empirical Results ◽

The Impact

The development in information technology results in a significant increase in bank competition. The question of whether increased competition improves bank profitability and risk reduction is important in many aspects. This paper analyzes the impact of competition on profitability and risk in the context of Vietnam using OLS estimator on data set of 37 Vietnamese commercial banks. The main results present that banks with a higher competition index tend to have higher profitability which is measured by ROE and NIM. In addition, our empirical results also show that banks tend to take on more risk when facing increased competition.

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Germany's Three-Pillar Banking System: Cross-Country Perspectives in Europe

10.5089/9781589063488.084 ◽

2004 ◽

Cited By ~ 2

Author(s):

International Monetary Fund

Keyword(s):

Banking System ◽

Cross Country

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PENETRASI BANK ASING DAN PENGARUHNYA TERHADAP KOMPETISI PERBANKAN YANG DIUKUR DENGAN PENDEKATAN CONJECTURAL VARIATION DI INDONESIA

Media Ekonomi ◽

10.25105/me.v21i1.790 ◽

2017 ◽

Vol 21 (1) ◽

pp. 1

Author(s):

Bahtiar Usman

Keyword(s):

Banking System ◽

Spillover Effects ◽

Foreign Bank ◽

Seemingly Unrelated Regression ◽

Foreign Banks ◽

Bank Competition ◽

Conjectural Variation ◽

Banking Competition ◽

Unrelated Regression ◽

Variation Approach

<p>This study examines the effect of foreign bank penetration on banking competition in Indonesia. Penetration of foreign banks is measured by using the ratio between total assets, total loans and total deposits of foreign banks to total assets, total loans and total deposits of the banking industry in Indonesia, such as those used by Levy and Micco (2007). Bank concentration is measured by using Concentration Ratio (CR3 and CR5) and the Herfindahl index. Bank competition is measured by using the Conjectural Variation approach as used by Cetorelli Angelini (2003). By using panel regression method with SUR (Seemingly Unrelated Regression) during 1998 to 2009, we found that the increase of foreign bank penetration will increase competition of banking in Indonesia through spillover effects on the domestic banking system. These results support the research of Jeon et al (2011).<br />Keywords: Foreign Bank Penetration, Conjectural Variation and Bank Competition</p>

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INCOME STRUTURE, CAPITAL STRUCTURE, BANK COMPETITION AND ECONOMIC INSTABILITY

Science and Technology Development Journal ◽

10.32508/stdj.v18i2.1118 ◽

2015 ◽

Vol 18 (2) ◽

pp. 56-67

Author(s):

Liem Thanh Nguyen ◽

Khoa Chi Pham

Keyword(s):

Banking System ◽

Monetary Shocks ◽

Bank Competition ◽

Inflation Volatility ◽

Economic Instability ◽

Economic Volatility ◽

Terms Of Trade Volatility ◽

Trade Volatility ◽

The Impact ◽

Growth Volatility

The paper examines the impact of factors belonging to banking system and their interaction with real and monetary shocks on economic volatility. Using panel data on 71 economies from 1998 - 2011, we provide evidence that the lower (higher) the bank competition is, the higher (lower) the impact of inflation (terms-of-trade) volatility on GDP growth volatility is. Banks with high shareholder equity ratios enjoy lower impact of inflation volatility on economic instability. Meanwhile, the extent of bank diversification in operations has no ability in adjusting the impact of the two sock types.

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Trade Invoicing, Bank Funding, and Central Bank Reserve Holdings

AEA Papers and Proceedings ◽

10.1257/pandp.20181065 ◽

2018 ◽

Vol 108 ◽

pp. 542-546 ◽

Cited By ~ 3

Author(s):

Gita Gopinath ◽

Jeremy C. Stein

Keyword(s):

Central Bank ◽

Exchange Rates ◽

Foreign Exchange ◽

Banking System ◽

Foreign Exchange Reserves ◽

Reserve Currency ◽

Bank Funding ◽

Cross Country ◽

Currency Composition ◽

Bank Reserve

We develop a model that shows how the currency denomination of a country's imports influences the funding structure of its banking system, and in turn, the currency composition of its central bank's reserve holdings. The link between the dollar's role in bank funding and its role as a central bank reserve currency is stronger when the country's fiscal capacity is limited, and when exchange rates are volatile. In the data, there is a pronounced cross-country relationship between the fraction of imports that are dollar invoiced, and the fraction of central-bank foreign-exchange reserves that are held in dollars.

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