Consolidation in banking and financial stability in Europe: Empirical evidence

André Uhde and Ulrich Heimeshoff ()

Journal of Banking & Finance, 2009, vol. 33, issue 7, 1299-1311

Abstract: Using aggregate balance sheet data from banks across the EU-25 over the period from 1997 to 2005 we provide empirical evidence that national banking market concentration has a negative impact on European banks' financial soundness as measured by the Z-score technique while controlling for macroeconomic, bank-specific, regulatory, and institutional factors. Furthermore, our analysis reveals that Eastern European banking markets exhibiting a lower level of competitive pressure, fewer diversification opportunities and a higher fraction of government-owned banks are more prone to financial fragility whereas capital regulations have supported financial stability across the entire European Union.

Keywords: Market; structure; Financial; stability; Banking; regulation (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (257)

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Working Paper: Consolidation in banking and financial stability in Europe: empirical evidence (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:33:y:2009:i:7:p:1299-1311

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