Wednesday, May 27, 2015

Bank Competition and Financial Stability: Much Ado About! Nothing?

Diana Zigraiova, Czech National Bank and Tomas Havraneka, Charles University ask Bank Competition and Financial Stability: Much Ado About! Nothing?

ABSTRACT: The theoretical literature gives conflicting predictions on how bank competition should affect financial stability, and dozens of researchers have attempted to evaluate the relationship empirically. We collect 598 estimates of the competition-stability nexus reported in 31 studies and analyze the literature using meta-analysis methods. We control for 35 aspects of study design and employ Bayesian model averaging to tackle the resulting model uncertainty. Our findings suggest that the definition of financial stability and bank competition used! by researchers influences their results in a systematic way. The choice of data, estimation methodology, and control variables also affects the reported coefficient. We find evidence for moderate publication bias. Taken together, the estimates reported in the literature suggest little interplay between competition and stability, especially in developing and transition countries, even when corrected for publication bias and potential misspecifications.

https://lawprofessors.typepad.com/antitrustprof_blog/2015/05/bank-competition-and-financial-stability-much-ado-about-nothing.html

| Permalink

TrackBack URL for this entry:

https://www.typepad.com/services/trackback/6a00d8341bfae553ef01bb08279c32970d

Listed below are links to weblogs that reference Bank Competition and Financial Stability: Much Ado About! Nothing?:

Comments

Post a comment