Abstract
This paper examines the relationship between competition and stability in the Kazakh banking sector using quarterly bank level data of private commercial banks. There have been many theories stand out on the relationship between competition and stability of the banking sector so far. But theories of the competition-fragility view and competition-stability view are widely accepted theories in the literature. The main method applied to achieve the established goal is a multiple regression analysis. Bank stability is used as a dependent variable and proxied by risk index. To measure the level of competition Lerner index and Boone indicator are calculated. Besides, the consistency between concentration and competition measures is tested applying a correlation analysis. Concentration in the banking sector is measured using Herfindahl-Hirschman Index (HHI) and concentration ratio CR5. The research revealed no statistically significant relationship between the values of Lerner index and Boone indicator estimated for Kazakh banking sector. The hypothesis about the consistency between different competition measures is rejected. In turn, the hypothesis about positive effect of competition on bank soundness is rejected only in the case when competition is proxies by Lerner index. Using Boone indicator as a competition measure, the results are doubtful.
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