The application of macroprudential policy tools to affect concentration in the Polish banking sector

Mateusz Mokrogulski ()
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Mateusz Mokrogulski: Warsaw School of Economics

No 4707270, Proceedings of International Academic Conferences from International Institute of Social and Economic Sciences

Abstract: Banking sectors in particular EU Member States are characterized by different profitability and concentration. In the literature there are divergent views on the appropriate concentration level from the perspective of supervisory authorities, consumers or banks themselves. However, the research carried out for Poland shows that there is positive correlation between concentration and profitability. Moreover, since 2009 a wave of mergers and acquisitions has occurred in the Polish banking sector, which is detrimental to consumers. This conclusion has been drawn from the Lerner index values that have been computed owing to the econometric model with transcendental logarithmic function for the total cost. Thus, if concentration is too high, the supervisory authorities could consider preventing further mergers or acquisitions using new macroprudential policy tools, instead of old administrative ones. Especially important here is the capital buffer that is set on other systemically important institutions. It can be accompanied by the systemic risk buffer. Nevertheless, the results of the comparative analysis show that diverse solutions are currently applied across EU Member States.

Keywords: concentration; Lerner index; macroprudential policy; capital buffer; bank (search for similar items in EconPapers)
JEL-codes: D04 G21 G28 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2017-04
New Economics Papers: this item is included in nep-ban and nep-eff
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Published in Proceedings of the Proceedings of the 28th International Academic Conference, Tel Aviv, Apr 2017, pages 102-115

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