scholarly journals Banking Competition and Efficiency in Jordan: A Note

2012 ◽  
Author(s):  
Khaldoun Al-Qaisi
Keyword(s):  
Financial Stability ◽  
Banking Sector ◽  
Banking Industry ◽  
Competitive Behavior ◽  
Policy Recommendations ◽  
Competitive Condition ◽  
Research Papers ◽  
Banking Competition ◽  
Structural Test ◽  
Over Time

The financial economics literature contains numerous research papers which examine issues that concern the banking industry. One of these issues is banking competition. Indeed, this issue is important because of its complications to financial stability and the growth of the borrowing firms. The purpose of this paper is to assess the competitive behavior of the Jordanian banking sector during the period ranging from 1999 to 2008 using the non-structural test developed by Panzar and Rosse. In more specific terms, this paper examines the overall competitive condition during the period 1999 – 2008 and how it has evolved over time. Based on the empirical findings, it is expected that a number of policy recommendations may be provided. The objective of these recommendations is to enhance the regulation of the banking sector in Jordan and improve their performance.  

COMPETITION-STABILITY RELATIONSHIP IN DUAL BANKING SYSTEMS: EVIDENCE FROM EFFICIENCY-ADJUSTED MARKET POWER

2021 ◽  
pp. 1-24
Author(s):  
MUDEER AHMED KHATTAK ◽  
OMAR ALAEDDIN ◽  
MOUTAZ ABOJEIB
Keyword(s):  
Market Power ◽  
Financial Stability ◽  
Banking Sector ◽  
Market Competition ◽  
Policy Implications ◽  
Islamic Banks ◽  
Banking Competition ◽  
Precise Measure ◽  
Conventional Banks ◽  
The Impact

This research attempts to explore the impact of banking competition on financial stability employing a more precise measure of market power. It was found that Islamic banks are less stable and are enjoying lower market power. The analysis shows that higher market competition makes the banking sector vulnerable to defaults, supporting the “competition-fragility view”. This research finds no difference in the relationship for Islamic banks indicates that Islamic banks might be involved in traditional banking activities as conventional banks. The results are consistent and robust to different estimation approaches and subsamples. This research carries regulatory and policy implications.

scholarly journals Perspectives on Corporate, Social, and Employee Purpose among Investment Bankers: A Qualitative Research Study

2021 ◽  
Author(s):  
Karen Pluess ◽  
Katy Sutcliffe
Keyword(s):  
Financial Stability ◽  
Research Study ◽  
Banking Industry ◽  
Meaningful Work ◽  
Investment Banking ◽  
Qualitative Research Study ◽  
Investment Bankers ◽  
Corporate Social ◽  
Depth Interviews ◽  
Over Time

There are increasing calls to re-establish the role and responsibility of banks towards society to repair trust and enhance financial stability. Through in-depth interviews with senior investment bankers, this study asks what bankers themselves think about the corporate (i.e. the industry’s core business), social (i.e. its moral responsibilities to wider society), and employee (i.e. bankers’ own feelings of purposefulness) purposes of the investment banking industry. Existing research tells us that there are significant reciprocal benefits to organisations, employees, and society at large when the three are aligned. The study’s findings suggest that while there have been important shifts in corporate and social purposes over time, bankers remain sceptical about their banks’ underlying motives and this has resulted in multiple disconnects. Perhaps surprising, the study finds that meaningful work that is also socially focused is something that investment bankers are seeking in some way. These insights should prompt banks to ensure that social purposes reflect and align with their corporate purposes; to move beyond rhetoric and virtue-signalling to action; and to help employees identify their contribution to it all.

scholarly journals Relationship between competition and efficiency in the Czech banking industry

2013 ◽  
Vol 61 (7) ◽  
pp. 2701-2707 ◽  
Author(s):  
Iveta Řepková ◽  
Daniel Stavárek
Keyword(s):  
Positive Relationship ◽  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
Empirical Literature ◽  
Data Envelopment ◽  
Reverse Effect ◽  
Banking Competition ◽  
Johansen Cointegration Test ◽  
The Relationship

The aim of the paper is to estimate the relationship between competition and efficiency in the Czech banking industry in the period 2001–2010. The theoretical definition and literature review of the relationship between banking competition and efficiency is included. Lerner index and Data Envelopment Analysis were used to estimate the degree of competition and efficiency in the Czech banking sector. The market structure of the Czech banking industry was estimated as a monopolistic competition and it was found a slight increase in the competition in the banking sector. The efficiency of the Czech banks increased in the analysed period. Using a Johansen cointegration test, the paper contributes to the empirical literature, testing not only the causality running from competition to efficiency, but also the reverse effect running from efficiency to competition. The positive relationship between competition and efficiency was estimated in the Czech banking sector. These findings are in line with the Quiet Life Hypothesis and the suggestions that the increase of the competition will contribute to efficiency.

scholarly journals The impact of monetary policy and bank competition on banking industry risk: A default analysis

2021 ◽  
Vol 16 (1) ◽  
pp. 205-215
Author(s):  
Sri Ayomi ◽  
Eleonora Sofilda ◽  
Muhammad Zilal Hamzah ◽  
Ari Mulianta Ginting
Keyword(s):  
Monetary Policy ◽  
Financial Stability ◽  
Banking Industry ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Dynamic Panel Data ◽  
Probability Of Default ◽  
Bank Competition ◽  
Banking Competition ◽  
The Impact

In the financial system and economy, the banking industry plays a crucial role. Default risk takes central stage in preserving financial stability and needs to be mitigated as it can trigger a crisis. The study examines the combined effects of monetary policy and bank competition on banking defaults. Using a sample of 95 commercial banks in Indonesia between 2009 and 2019, this study employs the Generalized Method of Moments, a two-step dynamic panel-data estimation system, to analyze it. Empirical estimation results show that monetary policy, through an increase in the benchmark interest rate, negatively affects probability of default. The extent of banking stability is also enhanced by monetary policy. Banking competition has a negative and significant effect on probability of default and has a positive effect on the banking distance to default. Furthermore, the combined impact of monetary policy and banking competition positively affects probability of default but has a negative impact on the distance of default. Building on this study, to promote a stable and more efficient banking system, policymakers should develop policies that foster complementary monetary and competition policies.

scholarly journals Measuring Competition in Banking Sector in Oman

2020 ◽  
Vol 1 (2) ◽  
pp. 34-43
Author(s):  
Amira Al Maamari
Keyword(s):  
Banking Sector ◽  
Structural Model ◽  
Monopolistic Competition ◽  
Policy Implications ◽  
Foreign Banks ◽  
Securities Market ◽  
Competitive Environment ◽  
Competitive Condition ◽  
Banking Competition ◽  
Equilibrium Market

Purpose of the study: The purpose of the study was to investigate and measure the competitive environment in the banking sector in Oman. Design/Methodology/Approach: This study considered an effort towards measuring the nature of competition of 12 out of 16 Omani banks from 2009 to 2019 over applying Panzar and Rosse (PR-model). It measured the competition index, called H-statistic, as it gives a quantitative assessment of the competitive nature of the studied market. The non-structural model was adopted to measure the competitive behavior of the banking sector. The data was taken from Muscat Securities Market (MSM) over obtaining financial statements of banks and data was tested using the Statistical Package for Social Sciences (SPSS). Findings: The result showed that it was not able to reject the monopolistic competition that H value considered between values of zero and one for the banking market in Oman. Thus, Omani banks operate under monopolistic competition. Practical Implications: The study has interesting policy implications. It is recommended to encourage foreign banks' presence to enhance the competitive condition of the banking sector thus making sure the exit and the entrance of banks in the industry to raise the competition. Social Implications: The flexibility in the competitive condition of the banking sector will lead to an increased competition so this will produce a variety of services and products to improve the banks’ performance and customer satisfaction. Originality/value: This is the first study of its kind in studying and testing the competitive environment for the banking sector in Oman using the PR-model. Keywords: Banking Competition in Oman, Monopolistic Competition, Market Equilibrium, Market contestability, Pazan and Rosse (PR model)

scholarly journals Effect of Bank Competition on Financial Stability: Empirical Evidence from Nepal

2018 ◽  
Vol 13 ◽  
pp. 19
Author(s):  
Surya Bahadur G.C. ◽  
Gyaneswar Sharma
Keyword(s):  
Financial Stability ◽  
Fixed Effects ◽  
Banking Sector ◽  
Banking System ◽  
System Stability ◽  
Annual Data ◽  
Bank Competition ◽  
Financial Industry ◽  
Banking Competition ◽  
The Impact

<p>There are two hypotheses about the relationship between competition and financial stability in the banking system: “competition-fragility” view argues that competition makes banks more likely totake excessive risks, thereby leading to fragility, while “competition-stability” view suggests that higherinterest rates in less competitive environments may cause borrowers to take higher risks,resulting in higher probability of non-performing loans and a more fragile system. This paper empirically examines the impact of competition on Nepalese banking system employing annual data of commercial banks from 1999 to 2012 period using fixed effects panel data model. The study period represents the era of rapid growth in financial institutions in Nepal. The HHI and n-bank concentration ratios are used as measure of competition while Z-index and nonperforming loans ratioare used as proxies of financial stability. The effects of macroeconomic factors and bank specific indicators are also taken into account. The results reveal that there is apositive relationship between greater banking competition and financial stability in Nepal, supporting the “competition-stability” view. Competition in banking sector is found to result in decrease in credit risk and contribute for financial stability. Mixed results have been achieved incase of the impact of bank competition on overall stability. The findings indicate that both higher concentration and higher competition are detrimental for stability. Hence, policymakers should facilitate further consolidation in the financial industry, however, it should be ensured that excessive consolidation doesn’t result in an environment that hinders competition. In addition,besides competition level in the banking system, macroeconomic situation of the country is found to be an important determinant of banking system stability.</p><p><em> </em><strong><em>Economic Literature</em></strong><em>, </em>Vol. XIII August 2016, page 19-31</p>

scholarly journals Microeconomic and Macroeconomic Effects of the Banking Sector Development Policy in Russia

2020 ◽  
Vol 15 (4) ◽  
pp. 30-61
Keyword(s):  
Banking Sector ◽  
Banking Industry ◽  
Banking System ◽  
Banking Supervision ◽  
Negative Effects ◽  
Banking Competition ◽  
Public Sector Banks ◽  
Competition Level ◽  
The Impact ◽  
Structural Methods

This article studies the impact of banking supervision on the Russian banking sector structure. The article also discusses the main challenges facing the banking system and the macroeconomic role of the Bank of Russia’s supervisory policy. Taking into account some features of the national banking sector, the author justifies the current strict banking supervision despite all possible short- and longterm negative effects of this policy. For example, static and dynamic estimates of the competition level in the Russian banking sector, which were obtained using structural and non-structural methods, show a low competition level. A noncompetitive banking industry increases costs in the economy and exacerbates existing imbalances. For this reason, the paper considers key measures that contribute to the development of banking competition. The article emphasizes the great importance of the goals of building a full three-tier banking system and privatization of public sector banks. However, strict banking supervision and consolidation of the banking industry have reduced the impact of negative factors on the supply of loans and increased the Russian banking sector’s sustainability. These positive changes and macroeconomic reform provide the basis for stable economic growth. The main results obtained can be used by national authorities to develop the Russian banking system.

scholarly journals Taking Identity Seriously: When Identity Meets Regulation

2021 ◽  
Author(s):  
Mehmet Kerem Coban
Keyword(s):  
Political Economy ◽  
Financial Stability ◽  
Banking Sector ◽  
Banking Regulation ◽  
Vital Role ◽  
Social Identities ◽  
The Political ◽  
Policy Recommendations ◽  
Identity Problem ◽  
Multiple Identity

Financial stability is a public good. Banking regulation has a vital role to play in the provision and maintenance of financial stability. This article introduces a multiple identity approach to the regulation of the banking sector. It conceptualises bankers and regulators sharing a common social identity with the rest of the society, namely taxpayer identity besides their respective banker and regulator identities. The article underlines the balance between two social identities, and the reasons why bankers and regulators cannot achieve a balance between the two. Finally, motivated by the multiple identity approach on the political economy of banking regulation, the article discusses two major policy recommendations for regulatory design, at least, to partially address the multiple identity problem.

scholarly journals Estimation of the competitive conditions in the Czech banking sector

2011 ◽  
Vol 59 (2) ◽  
pp. 299-306 ◽  
Author(s):  
Daniel Stavárek ◽  
Iveta Řepková
Keyword(s):  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
Necessary Condition ◽  
Banking Competition ◽  
The Czech Republic ◽  
Full Sample ◽  
Empirical Industrial Organization ◽  
Banking Market ◽  
Competition Level

The paper uses New Empirical Industrial Organization approach, especially Panzar-Rosse model to estimates the level of competition of the banking industry in the Czech Republic during the period 2001–2009. We apply Panzar-Rosse model to estimate H statistic for a panel of 15 banks, which represent almost 90 % of the market. This paper also measures and compares the degree of banking competition in two sub-periods, 2001–2005 and 2005–2009, in order to investigate development of the competitive structure of the Czech banking industry. We found that the market was in equilibrium during most of the estimation period, which is a necessary condition for sound evaluation of the competition level. While the market can be described as perfectly competitive in 2001–2005, the intensity of competition decreased after joining the EU in 2004 and the market can be characterized as one of monopolistic competition in 2005–2009. The monopolistic competition in the Czech banking market was also revealed if the full sample 2001–2009 is considered.

scholarly journals Competition and Concentration in Bangladeshi Banking Sector

2016 ◽  
Vol 5 (1) ◽  
pp. 16-29
Author(s):  
Anwar Hossain Repon ◽  
Zahidul Islam
Keyword(s):  
Market Structure ◽  
Concentration Ratio ◽  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
Market Concentration ◽  
Sample Period ◽  
Banking Competition ◽  
The Past ◽  
Bank Concentration

The purpose of this paper is to investigate the market structure and degree of concentration of Bangladeshi banking industry. The study measured market concentration by using widely recognized measures like k-bank concentration ratio and Herfindahl-Hirchman Index (HHI). It evaluates market structure by applying Panzar-Rosse Model over 8 years period from 2006 to 2013. The result of concentration measures indicates a decreasing trend and low level of market concentration in Bangladeshi banking industry over the sample period. The panzer-Rosse “H-Statistic” suggests that banks in Bangladesh are operating under monopolistic competition. Present paper contributes to a burgeoning literature on banking competition that has evolved significantly over the past periods on a developing country perspective like Bangladesh.

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