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Competition and Stability in European Banking: A Regional AnalysisHong LiuUniversity of Glasgow - Glasgow Business School Philip MolyneuxBangor University, Bangor Business School John O.S. WilsonUniversity of St. Andrews September 2, 2010 Abstract: National measures of competition and macroeconomic activity have been used by researchers in recent years to explain performance and risk differentials across banks. However, such measures may be inappropriate for banks which operate with a regional focus. In this paper we construct measures of competition and economic activity using regional data to examine bank risk and stability in 11 European countries over the period 2000-2008. The results suggest that a U-shaped relationship exists between regional bank competition and risks. Furthermore, regional economic conditions play a significant role in determining the stability of banks.
Number of Pages in PDF File: 29 Keywords: Competition, European Banking, Regional Economic Conditions, Risk, Stability JEL Classification: G21 working papers seriesDate posted: September 2, 2010Suggested CitationContact Information
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