Market concentration, risk-taking, and bank performance: evidence from emerging economies

Article

Zhang, J., Jiang, C., Qu, B. and Wang, P. 2013. Market concentration, risk-taking, and bank performance: evidence from emerging economies. International Review of Financial Analysis. 30, pp. 149-157. https://doi.org/10.1016/j.irfa.2013.07.016
TypeArticle
TitleMarket concentration, risk-taking, and bank performance: evidence from emerging economies
AuthorsZhang, J., Jiang, C., Qu, B. and Wang, P.
Abstract

This paper investigates the relationship between market concentration, risk-taking, and bank performance using a unique dataset of the BRIC banks over the period 2003-2010. We find a negative association between market concentration and performance, in support of the “quiet life” hypothesis. We also find that banks taking a lower level of risks perform better, in favour of prudential practice. Moreover, the BRICs’ banking sectors were all negatively affected by the 2007-2008 global financial crisis with China and Russia being the least and most affected, respectively. On average Chinese and Brazilian banks outperform Indian and Russian ones, indicating that China and Brazil have more favourable institutional infrastructure. These results are robust to alternative model specifications and estimation techniques. Our analysis may have important policy implications for bankers and regulators in the BRICs and other developing and transition countries.

KeywordsMarket concentration, Risk-taking, Bank performance; Stochastic frontier analysis; Brazil; Russia; India; China
PublisherElsevier
JournalInternational Review of Financial Analysis
ISSN1057-5219
Publication dates
PrintDec 2013
Publication process dates
Deposited10 Jul 2015
Accepted25 Jul 2013
Output statusPublished
Accepted author manuscript
License
Additional information

Available online 23 August 2013

Digital Object Identifier (DOI)https://doi.org/10.1016/j.irfa.2013.07.016
LanguageEnglish
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