The effect of banking market structure on the lending channel: Evidence from emerging markets

Mohammed Amidu and Simon Wolfe

Review of Financial Economics, 2013, vol. 22, issue 4, 146-157

Abstract: This paper analyses the extent to which the level of bank competition influences monetary policy transmission. Using a large panel dataset of 978 banks from 55 countries, and employing the Lerner index model as a measure of market structure, our results show that an increase in banking sector competition weakens the effectiveness of monetary policy on bank lending. The findings are robust to a broad array of sensitivity checks including control of alternative measurements of the Lerner index, different samples and different methodological specifications. By extension, these results have important policy implications for regulators in assessing the effectiveness of monetary policy transmission mechanisms.

Keywords: Banking competition; Bank lending channel; Emerging markets (search for similar items in EconPapers)
JEL-codes: E4 E5 F3 L1 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:revfin:v:22:y:2013:i:4:p:146-157

DOI: 10.1016/j.rfe.2013.05.002

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