Systemic Banking Crises: The Relationship Between Concentration and Interbank Connections

Andrea Calef

No 2020-02, University of East Anglia School of Economics Working Paper Series from School of Economics, University of East Anglia, Norwich, UK.

Abstract: In this paper I study the extent to which the nexus between concentration and interbank linkages affects financial stability, using data for a sample of 19,689 banks in 69 countries from 1995 to 2014. I find that high levels of interbank exposures decrease the probability of observing a systemic banking crisis, when the banking system is either highly concentrated or fragmented. The relationship between concentration and stability is found to be non-monotonic, as predicted by Martinez-Miera & Repullo (2010), although not U-shaped.

Keywords: banking crisis, systemic risk, market structure; interbank linkages, network, contagion. (search for similar items in EconPapers)
JEL-codes: G01 G21 G28 (search for similar items in EconPapers)
Date: 2020-01-15
New Economics Papers: this item is included in nep-ban, nep-fdg, nep-net and nep-rmg
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