Synergy or downward competition? Interactions between small credit institutions in local markets

Łukasz Kozłowski

Finance Research Letters, 2016, vol. 16, issue C, 66-74

Abstract: This paper analyzes competition in Polish local bank markets based on branch geocoding. I find symptoms of synergy effects from potential collaboration between different cooperative banks. Conversely, stronger competition from credit unions, which, until recently, remained outside the official supervisory system and had poor loan portfolios, corresponds with cooperative banks’ worsened loan portfolio quality and performance. The results allow for the conjecture that leaving shadow banks outside the supervisory system may create unwanted competition and may negatively influence the stability of the banking sector.

Keywords: Cooperative banks; Credit unions; Shadow banks; Local competition (search for similar items in EconPapers)
JEL-codes: G21 G28 L1 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:16:y:2016:i:c:p:66-74

DOI: 10.1016/j.frl.2015.10.011

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