Competition, efficiency and soundness in banking
| Název práce v češtině: | Konkurence, efektivita a zdraví v bankovnictví |
|---|---|
| Název v anglickém jazyce: | Competition, efficiency and soundness in banking |
| Klíčová slova: | banky, konkurence, nákladová efektivnost, zdraví, Boone indicator |
| Klíčová slova anglicky: | Banks, competition, cost efficiency, soundness, Boone indicator |
| Akademický rok vypsání: | 2012/2013 |
| Typ práce: | diplomová práce |
| Jazyk práce: | angličtina |
| Ústav: | Institut ekonomických studií (23-IES) |
| Vedoucí / školitel: | doc. PhDr. Adam Geršl, Ph.D. |
| Řešitel: | skrytý - zadáno vedoucím/školitelem |
| Datum přihlášení: | 15.02.2013 |
| Datum zadání: | 15.02.2013 |
| Datum a čas obhajoby: | 25.06.2014 00:00 |
| Místo konání obhajoby: | ies |
| Datum odevzdání elektronické podoby: | 14.05.2014 |
| Datum proběhlé obhajoby: | 25.06.2014 |
| Oponenti: | doc. PhDr. Zuzana Havránková, Ph.D. |
| Kontrola URKUND: | |
| Zásady pro vypracování |
| The thesis will focus on the relationship between competition in the banking sector and bank soundness. There is no clear consensus about the effect of competition on bank soundness. Some literature such as Perotti and Suarez (2002) suggests that competition can cause less prudent lending strategies and even failures of banking institutions. On the other hand, there are studies such as Schaeck, Čihák and Wolfe (2006) that find a positive link between competition and bank soundness. Given this ongoing debate whether the impact of higher competition on bank soundness is positive or negative there is a space for empirical analysis of this topic.
My focus will be on the concept of bank efficiency which might be an important link between competition and soundness. The main hypothesis is that competition positively affects efficiency, and efficient banks are sounder. This hypothesis is supported by existing literature: Berger and Hannan (1994) came to a conclusion that uncompetitive markets support bank inefficiency and Berger and DeYoung (1997) confirmed the positive link between efficiency and soundness. The thesis consists of two main parts: theoretical and empirical. In the theoretical part I will focus on how to measure competition, efficiency and soundness and on describing in detail the channels through which competition can affect bank soundness. The empirical part will us bank-level data and examine whether competition and bank soundness are interlinked via efficiency. |
| Seznam odborné literatury |
| 1. BERGER, Allen N. & Robert DeYOUNG. Problem Loans and Cost Efficiency in Commercial Banks. Journal of Banking and Finance. 1997, No. 21.
2. BERGER, Allen N. & Timothy H. HANNAN. The Efficiency Costs of Market Power in the Banking Industry: A Test of "Quiet Life" and Related Hypothesis. Wharton Working Paper. November 1994, No. 29. 3. BOYD, John H., Gianni DE NICOLÒ & Abu M. JALAL. Bank Competition, Risk and Asset Alocation. IMF Working Paper. July 2009, No. 143. 4. CLAESSENS, Stijn. Competition in the Financial Sector: Overview of Competition Policies. IMF Working Paper. March 2009, No. 45. 5. DE NICOLÒ, Gianni & Marcella LUCCHETTA. Bank Competition and Financial Stability: A General Equilibrium Exposition. IMF Working Paper. December 2011, No. 295. 6. IGAN, Deniz a Marcelo PINHEIRO. Credit Growth and Bank Soundness: Fast and Furios? IMF Working Paper. December 2011, No. 278. 7. KABLAN, Sandrine. Banking Efficiency and Financial Development in Sub-Saharan Africa. IMF Working Paper. June 2010, No. 136. 8. PERROTI, Enrico C. & Javier SUAREZ. Last Bank Standing: What Do I Gain If You Fail? European Economic Review. 2002, No. 9 9. REE, Jack Joo K. Impact of Global Crisis on Banking Sector Soundness in Asian Low-Income Countries. IMF Working Paper. May 2011, No. 115. 10. SCHAECK, Klaus, Martin ČIHÁK & Simon WOLFE. Are More Competitive Banking Systems More Stable? IMF Working Paper. June 2006, No. 143. 11. SCHAECK, Klaus & Martin CIHAK. Competition, Efficiency, and Soundness in Banking: An Industrial Organization Perspective. European Banking Centre Discussion Paper. July 2010, No. 2010-20S. 12. SUN, Yu. Recent Developments in European Bank Competition. IMF Working Paper. June 2011, No. 146. |
| Předběžná náplň práce |
| The theoretical part will be based on available literature on competition, efficiency and soundness. It will cover issues related to the measurement of the level of competition and the hypotheses about the link between competition and soundness.
In the empirical part, I am going to analyze the link between competition and bank soundness using a sample of selected European banks . from the database BankScope. The methodology used in the empirical part will follow Schaeck and Cihak (2010). However, while they focus on developed markets, my research will focus on banks from central and eastern European region to enable comparison of countries with similar economic conditions. The data analysis will be performed within a panel data regression framework. Hypotheses: 1. There is a link from competition to soundness via competition-efficiency nexus. 2. There is a positive link between competition and soundness. 3. Efficient banks are sounder. 4. The relationship between competition and soundness differs between countries from selected sample. |
| Předběžná náplň práce v anglickém jazyce |
| The theoretical part will be based on available literature on competition, efficiency and soundness. It will cover issues related to the measurement of the level of competition and the hypotheses about the link between competition and soundness.
In the empirical part, I am going to analyze the link between competition and bank soundness using a sample of selected European banks . from the database BankScope. The methodology used in the empirical part will follow Schaeck and Cihak (2010). However, while they focus on developed markets, my research will focus on banks from central and eastern European region to enable comparison of countries with similar economic conditions. The data analysis will be performed within a panel data regression framework. Hypotheses: 1. There is a link from competition to soundness via competition-efficiency nexus. 2. There is a positive link between competition and soundness. 3. Efficient banks are sounder. 4. The relationship between competition and soundness differs between countries from selected sample. |