Competition and Stability in European Banking: A Regional Analysis

26 Pages Posted: 15 Feb 2013  

Hong Liu

University of Glasgow - Adam Smith Business School

Philip Molyneux

Bangor Business School

John O. S. Wilson

University of St. Andrews

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Date Written: March 2013

Abstract

National measures of competition and macroeconomic activity have traditionally been used to examine performance and risk features across banks. Such measures may be inappropriate in cases where banks operate with a regional focus. In this paper we construct measures of competition and economic activity using regional data to examine bank stability in 10 European countries over the period 2000–8. The results suggest that an inverted U‐shaped relationship exists between regional bank competition and stability. Regional economic conditions are also found to play a significant role in determining the stability of European banks.

Suggested Citation

Liu, Hong and Molyneux, Philip and Wilson, John O. S., Competition and Stability in European Banking: A Regional Analysis (March 2013). The Manchester School, Vol. 81, Issue 2, pp. 176-201, 2013. Available at SSRN: https://ssrn.com/abstract=2218207 or http://dx.doi.org/10.1111/j.1467-9957.2011.02285.x

Hong Liu

University of Glasgow - Adam Smith Business School ( email )

Glasgow, Scotland
United Kingdom

Philip Molyneux

Bangor Business School ( email )

Bangor Business School
College Road
Gwynedd LL57 2DG, Wales LL57 2DG
United Kingdom

John O. S. Wilson

University of St. Andrews ( email )

North St
Saint Andrews, Fife KY16 9AJ
United Kingdom

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