The financial support of the Instituto (formerly, Ente) Luigi Einaudi, sponsoring the research project ‘Competition in European Banking’, is gratefully acknowledged. The usual disclaimer applies.
COMPETITION AND STABILITY IN EUROPEAN BANKING: A REGIONAL ANALYSIS*
Article first published online: 8 APR 2012
© 2012 The Authors. The Manchester School © 2012 Blackwell Publishing Ltd and The University of Manchester
The Manchester School
Volume 81, Issue 2, pages 176–201, March 2013
How to Cite
LIU, H., MOLYNEUX, P. and WILSON, J. O. S. (2013), COMPETITION AND STABILITY IN EUROPEAN BANKING: A REGIONAL ANALYSIS. The Manchester School, 81: 176–201. doi: 10.1111/j.1467-9957.2011.02285.x
Manuscript received 8.10.10; final version received 20.4.11.
- Issue published online: 14 FEB 2013
- Article first published online: 8 APR 2012
National measures of competition and macroeconomic activity have traditionally been used to examine performance and risk features across banks. Such measures may be inappropriate in cases where banks operate with a regional focus. In this paper we construct measures of competition and economic activity using regional data to examine bank stability in 10 European countries over the period 2000–8. The results suggest that an inverted U-shaped relationship exists between regional bank competition and stability. Regional economic conditions are also found to play a significant role in determining the stability of European banks.