Competitive Environment and Financial Stability in the Peruvian Microfinance System

Katia Huayta, Antonella Garcia and Narda Sotomayor
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Katia Huayta: Superintendencia de Banca, Segurosy AFP
Antonella Garcia: Superintendencia de Banca, Segurosy AFP
Narda Sotomayor: Superintendencia de Banca, Segurosy AFP

No 2018-005, Working Papers from Banco Central de Reserva del Perú

Abstract: This paper examines the relationship between competition and financial stability for Peruvian microfinance institutions, during the 2002-2016 period. Using the Panzar and Rosse H-statistic as well as the Boone indicator for the evaluation of competition, and the Roy Z-score as a proxy for financial stability, we find a non-linear relationship (inverted U-shaped) between competition and financial stability, which validates the Martínez-Miera and Repullo approach. Furthermore, we find that competition in the Peruvian microfinance system might increase even when market concentration increases; and, according to the H-statistic, the market structure that best fits this system is monopolistic competition.

Keywords: SVARs; Competition; Panzar and Rosse H-statistic; Boone indicator; relevant market; financial stability; Z-score; microfinance (search for similar items in EconPapers)
JEL-codes: G21 L11 L22 L25 (search for similar items in EconPapers)
Date: 2018-11
New Economics Papers: this item is included in nep-ban, nep-com, nep-ind and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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