Banking Competition and Financial Stability: Evidence from CIS Countries

Javid Nabiyev, Kanan Musayev () and Leyla Yusifzada
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Kanan Musayev: Central Bank of Azerbaijan Republic

No 1604, Working Papers from Central Bank of Azerbaijan Republic

Abstract: The study provides empirical analysis of the cross-country relationship between a direct measure of competitive conduct of banking system and financial system in CIS countries during the period from 2001 to 2013. We determine the level of banking competition by using Panzar and Rosse H-statistic. Estimation results from Logit probability analysis reveal that the level of competition does not significantly affect the probability of banking crisis in such countries. However, a number of macroeconomic and institutional factors have a significant influence in financial stability. According to empirical results, higher inflation increases the probability of a banking crisis. On the other hand, credit growth decreases the probability of banking crisis in the investigated countries. These results are robust to the methodology when the interaction of concentration and h-statistic is used. The institutional factors have significant influence on preventing banking crises. Specifically, improvement in government effectiveness decreases the probability of banking crisis.

Keywords: banking competition; concentration; competition-stability; competition-fragility; h-statistics; financial stability (search for similar items in EconPapers)
JEL-codes: D41 G21 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2016-06-28
New Economics Papers: this item is included in nep-ban, nep-com and nep-cwa
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:aze:wpaper:1604

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