Bank Risk-Taking and Competition in the Albanian Banking Sector

Elona Dushku
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Elona Dushku: University of Rome, Italy

South-Eastern Europe Journal of Economics, 2016, vol. 14, issue 2, 187-203

Abstract: Exploring the link between competition and bank risk is an important issue for financial stability and for the economy as a whole. We have used bank level data to empirically test the relationship between bank risk and competition in Albania during the 2004-2014 period. Our results confirm the "competition-fragility" view for the total (and foreign) credit risk, where higher market power is associated with lower risk. Furthermore, we have revealed some aspects of the "competitionstability" relationship concerning nonperforming loans in local currency. We are providing evidence that, after the crisis, the relationship between total (plus foreign) credit risk and competition is nonlinear.

Keywords: Bank Competition; Credit Risk; Financial Stability; Lerner Index (search for similar items in EconPapers)
JEL-codes: C23 G21 G32 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:seb:journl:v:14:y:2016:i:2:p:187-203

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