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- Title
The Conditional Effects of Market Power on Bank Risk--Cross-Country Evidence.
- Authors
FORSSBÆCK, JENS; SHEHZAD, CHOUDHRY TANVEER
- Abstract
We investigate the relationship between market power and risk for a large panel of banks worldwide. Loan and deposit market power are measured separately at bank-year level, and the risk effect of market power is conditioned on several factors predicted by theory. Both loan and deposit market power have a stable, monotonically negative effect on risk, irrespective of risk measure. The effect is larger for asset risk, and is independent of charter value and capital ratios. The effect on default risk tends to decrease in the quality of banking regulation, whereas the conditioning effects of deposit insurance protection are mixed.
- Subjects
CONDITIONAL probability; MARKET power; FINANCIAL risk; DEPOSIT banking; RISK management of financial institutions; BANK management
- Publication
Review of Finance, 2015, Vol 19, Issue 5, p1997
- ISSN
1572-3097
- Publication type
Article
- DOI
10.1093/rof/rfu044