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AuthorBen Ali M.S.
AuthorIntissar T.
AuthorZeitun R.
Available date2020-04-07T11:46:17Z
Publication Date2018
Publication NameEastern Economic Journal
AbstractIn this paper, we analyze the relationship between banking concentration and financial stability for a sample of 156 developed and developing countries during the period 1980-2011. Our study first examines the direct effect of banking concentration on financial stability. The results provide evidence that concentration does not directly affect the stability of the financial system. The study also investigates two indirect channels and finds that concentration has a positive and stabilizing impact on financial stability through the profitability channel and a negative and destabilizing impact through the interest rate channel. When considering the level of development across countries, our results support the existence of a stabilizing effect of concentration on financial stability and the absence of a destabilizing interest channel for developing countries. Interestingly, our results also indicate that concentration has a direct and indirect effect on financial stability during crisis periods, but no direct effect on financial stability during normal periods.
PublisherPalgrave Macmillan Ltd.
Subjectbanking fragility
Subjectfinancial stability
TitleBanking Concentration and Financial Stability. New Evidence from Developed and Developing Countries
Issue Number1
Volume Number44

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