Bank Concentration and Crises

Asli Demirgüç-Kunt
Thorsten Beck
Ross Levine
Publication Type: 
Working Papers
Journal Name: 
NBER Working Paper No. 9921
Publication Year: 
2003

Motivated by public policy debates about bank consolidation and conflicting theoretical predictions about the relationship between the market structure of the banking industry and bank fragility, this paper studies the impact of bank concentration, bank regulations, and national institutions on the likelihood of suffering a systemic banking crisis. Using data on 70 countries from 1980 to 1997, we find that crises are less likely in economies with (i) more concentrated banking systems, (ii) fewer regulatory restrictions on bank competition and activities, and (iii) national institutions that encourage competition.

JEL Codes: 
G21, G28, L16
Region: 
Global
Topic: 
Financial Institutions
Topic: 
Regulation
Topic: 
Econometrics and Statistical Methods