Competition and Stability in European Banking: A Regional Analysis

29 Pages Posted: 2 Sep 2010

See all articles by Hong Liu

Hong Liu

Loughborough University - School of Business and Economics

Philip Molyneux

University of Sharjah; University of Sharjah - College of Business Administration

John O. S. Wilson

University of St. Andrews

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 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

Loughborough University - School of Business and Economics ( email )

Epinal Way
Leics LE11 3TU
Leicestershire
United Kingdom

Philip Molyneux

University of Sharjah - College of Business Administration ( email )

University City Road
Sharjah, 27272
United Arab Emirates

University of Sharjah ( email )

College of Business Administration
University of Sharjah
Sharjah, Sharjah
United Arab Emirates

HOME PAGE: http://www.sharjah.ac.ae/en/academics/Colleges/business/Pages/ppl_detail.aspx?mcid=1

John O. S. Wilson (Contact Author)

University of St. Andrews ( email )

North St
Saint Andrews, Fife KY16 9AJ
United Kingdom

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