Use this URL to cite or link to this record in EThOS: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.599894
Title: Banking sector competition and its impact on banks' risk-taking and interest margins in the Central and East European countries
Author: Arben, Mustafa
ISNI:       0000 0004 5350 0391
Awarding Body: Staffordshire University
Current Institution: Staffordshire University
Date of Award: 2014
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Abstract:
This thesis provides empirical evidence on the degree of banking sector competition in the Central and East European (CEE) countries and the impact of competition on banks’ risktaking and interest margins. The thesis uses data on around 300 banks from 17 CEE countries for the period 1999-2009, and employs a variety of estimation methodologies. The first objective of the thesis is to measure the degree of banking sector competition in CEE countries. Using the Panzar-Rosse approach, we found that the banking sectors of the CEE countries have been characterized by monopoly behaviour. By distinguishing between the non-EU and EU countries of the region, we found that banks operating in the non-EU countries faced a lower degree of competition compared to banks operating in the EU members of the region. The separate estimation for Kosovo indicated that the competitive behaviour of banks operating in this country was consistent with monopolistic competition. The second objective of the thesis is to estimate the impact of banking sector competition on the degree of banks’ risk-taking. Using country-level Panzar-Rosse H-statistic estimates as a measure of competition, for the overall sample, we found that competition enhances the quality of the loan portfolio, thus providing evidence against the mainstream view on the trade-off between competition and stability. However, for the non-EU countries of our sample the impact of competition on banks’ risk-taking appeared positive, which implies that more effective authorities are needed in these countries to oversee the banks’ behaviour when competitive pressures increase. The third objective of the thesis is to estimate the impact of banking sector competition on banks’ interest margins. The results suggest that competition had a negative impact on net interest margins. The impact of competition in reducing the net interest margins was stronger in the non-EU countries compared to the EU countries of the sample. Overall, the results suggest that the banking sectors of the CEE countries are characterized by low levels of competition, implying higher risk and larger interest margin.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.599894  DOI: Not available
Keywords: N100 Business studies ; N300 Finance
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