Market Structure, Financial Intermediation and Riskiness of Banks: Evidence from Asia Pacific

26 Pages Posted: 20 Feb 2014

See all articles by Wahyoe Soedarmono

Wahyoe Soedarmono

Sampoerna University - Faculty of Business

Amine Tarazi

University of Limoges - Faculty of Law and Economic Science

Date Written: February 18, 2014

Abstract

From a sample of commercial banks in Asia Pacific over the 1994-2009 period, this study highlights that banks in less competitive markets exhibit lower loan growth and higher instability. Such instability is further followed by a decline in deposit growth, suggesting that Asian banks are also subject to indirect market discipline mechanisms through bank market structure. This study therefore sheds light on the importance of enhancing bank competition to overcome bank risk and strengthen financial intermediation. This study also advocates greater reliance on market discipline to promote bank stability.

Keywords: Bank competition, loan growth, risk, market discipline, Asia Pacific

JEL Classification: G21, G28

Suggested Citation

Soedarmono, Wahyoe and Tarazi, Amine, Market Structure, Financial Intermediation and Riskiness of Banks: Evidence from Asia Pacific (February 18, 2014). Available at SSRN: https://ssrn.com/abstract=2398175 or http://dx.doi.org/10.2139/ssrn.2398175

Wahyoe Soedarmono (Contact Author)

Sampoerna University - Faculty of Business ( email )

Jl. Raya Pasar Minggu, Kav. 16
Jakarta, Pancoran 12780
Indonesia

Amine Tarazi

University of Limoges - Faculty of Law and Economic Science ( email )

5 rue Felix Eboue
Limoges, 87000
France

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