 Is the relationship between bank stability, competition, and intervention quality nonlinear? Evidence from North African countriesInes Ghazouani and Nadia Basty African Development Review, 2023, vol. 35, issue 1, 38-51 Abstract: This paper highlights the existence of a nonlinear relationship between bank stability and competition and analyzes the role that government intervention plays in shaping this relationship. We used a sample of 45 banks in North African countries over the period 2005–2019. We applied a semiparametric approach based on penalized spline estimation. The results unveil the specific shape of the competition–stability relationship at different levels of competition; banks reconsider their risk‐taking behavior at each level of competition. This nonmonotonic stability at different levels of competition is attributed to the quality of intervention, which is found to be an important determinant in shaping this relationship. Thus, we explain the dispersion of risk levels among North African banks in part by the quality of regulation in each country and conclude by recommending the strengthening of regulation, supervision and the macro‐prudential framework. Date: 2023 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:afrdev:v:35:y:2023:i:1:p:38-51 Ordering information: This journal article can be ordered from Access Statistics for this article African Development Review is currently edited by John C. Anyanwu, Hassan Aly and Kupukile Mlambo More articles in African Development Review from African Development Bank Contact information at EDIRC. |
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