Bank Performance, Financial Stability and Market Concentration: Evidence From Cooperative and Non‐cooperative Banks
Year: 2018
Type: article
Abstract: ABSTRACT Relying upon highly territorially disaggregated data taken at labour market areas, the paper explores the relationship between bank performances and financial stability of the banking system taking into account the role of market concentration. The z‐score is used as financial stability indicator, while the performance of financial intermediaries is measured using a parametric method recently developed (Kumbhakar et al. 2014). The empirical evidence shows a positive relationship between bank performance and financial stability and supports the ‘concentration–stability’ view for non‐cooperative banks only when concentration is measured on the whole sample of banks. Differences in the performance–stability nexus seem to depend more on the type of banks rather than different levels of market concentration. Higher market concentration of cooperative banks affects systemic stability by reducing the z‐scores of non‐cooperative banks, supporting the hypothesis that the presence of non‐profit‐maximizing entities can pull down stability of other financial institutions.
DOI: 10.1111/apce.12217
Authors: Cristian BARRA, Roberto ZOTTI
Institutions: University of Salerno, University of Turin
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2889243791