Abstract
Does banking market power matter on financial stability?
Highlights
In the literature, the impact of competition on bank stability is one of the debated issues
STABILITYit is a proxy for bank stability, calculates by SDROA, standard deviation of return on equity (SDROE); the variables Xit are a set of {k} variables controlling for bank-specific characteristics, the total equity divided by total assets (ETA); the total loan divided by total assets(LTA); the loan growth rate (Loangr), the logarithm of total assets (Size), and ε is the estimation error
Our study has investigated the impact of market power on financial stability by using a panel data of the 24 Vietnamese commercial banks over the period 2008 - 2017
Summary
The impact of competition on bank stability is one of the debated issues. Wahyoe et al (2011) estimated the impact of market power on banking stability for 12 Asian countries from 2001 to 2007 period. They postulated that higher market would increase financial instability. Widede et al (2015) examined the impact of market power on banking stability for 18 countries in the Middle East and North Africa (MENA) and pointed out that there was little correlation between market power and financial instability in the period 2000-2008. In Vietnam, Nguyen et al (2017) mentioned that competition helps Vietnamese commercial banks have more stable operating results in the first stage and would gradually decrease when the financial crisis occurs.
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