Competition and Stability in European Banking: A Regional Analysis

29 Pages Posted: 2 Sep 2010

See all articles by Hong Liu

Hong Liu

University of Aberdeen

Philip Molyneux

University of Sharjah - College of Business Administration

John O. S. Wilson

University of St. Andrews

Multiple version iconThere are 2 versions of this paper

Date Written: 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.

Keywords: Competition, European Banking, Regional Economic Conditions, Risk, Stability

JEL Classification: G21

Suggested Citation

Liu, Hong and Molyneux, Philip and Wilson, John O. S., Competition and Stability in European Banking: A Regional Analysis (September 2, 2010). Available at SSRN: https://ssrn.com/abstract=1670744 or http://dx.doi.org/10.2139/ssrn.1670744

Hong Liu

University of Aberdeen ( email )

Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

Philip Molyneux

University of Sharjah - College of Business Administration ( email )

University City Road
Sharjah, 27272
United Arab Emirates

John O. S. Wilson (Contact Author)

University of St. Andrews ( email )

North St
Saint Andrews, Fife KY16 9AJ
United Kingdom

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