Market Concentration and Income Diversification: Do They Always Promote the Financial Stability of Banking Industry?
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1 décembre 2020
- handle: 10670/1.hnkv5w
Ce document est lié à :
10.14718/revfinanzpolitecon.v12.n2.2020.3270
info:eu-repo/semantics/openAccess
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Fortunes Household income Personal income Family income Banking Banking industry Commercial banks Agricultural banks Depository institutionsCiter ce document
Jorge Andrés Muñoz-Mendoza et al., « Market Concentration and Income Diversification: Do They Always Promote the Financial Stability of Banking Industry? », Revista Finanzas y Política Económica, ID : 10670/1.hnkv5w
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Résumé
This paper analyzes the effects of market concentration and income diversification on the financial stability of the world banking system. It uses the GMM estimator proposed by Arellano and Bover (1995) to study 206 countries between 1994 and 2015. The results show that market concentration and income diversification have a positive and nonlinear effect on financial stability; and a negative and nonlinear effect on bank risk. The nonlinearity shape suggests that the effects are reversed when the banking industry has a higher market concentration and income diversification. In these cases, lower levels of stability and higher risks would characterize the banking industry. Nonlinearity establishes threshold values that are relevant for the empirical discussion oriented to an optimal design of financial policies and banking strategies.