The influence of market power on bank risk-taking in the Euro area countries during the inter-crises period Online publication date: Thu, 06-Apr-2023
by Adriana Novotná; Kristína Kočišová
International Journal of Monetary Economics and Finance (IJMEF), Vol. 16, No. 1, 2023
Abstract: The European debt crisis affected the global economy, and banking stability became fragile. The economy was recovering from a difficult situation, and a new threat in the form of COVID-19 had emerged. Using a sample of 405 banks in 19 Euro area countries between 2010 and 2019, we explore the relationship between market power and bank risk-taking behaviour and verify the presence of competing paradigms. We use panel data analysis considering linear regression models and testing the potential U-shaped curve to analyse banks' market power and risk-taking behaviour. We consider various dimensions of bank risk measures (default risk, leverage risk, operational risk, liquidity risk and interest rate risk), while the market power is expressed through the Lerner index. We also examine the impact of bank-specific and macroeconomic variables on bank stability. The main findings reveal that higher market power decreases banks' risky behaviour, confirming the competition-fragility paradigm.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Monetary Economics and Finance (IJMEF):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com
Our Blog 
Follow us on Twitter 
Visit us on Facebook