Market power, efficiency and stability of Indian banks

Biswa Swarup Misra () and Paolo Coccorese
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Biswa Swarup Misra: XIM University

Economic Change and Restructuring, 2022, vol. 55, issue 4, No 10, 2263-2292

Abstract: Abstract We investigate the relationship between stability and market power in the Indian banking system for the years 2005 to 2019. For this purpose, we employ three different indicators of bank stability and two alternate measures of the Lerner index (traditional and efficiency-adjusted). Our empirical specification takes into account the possibility of a nonlinear relationship between competition and stability. We use bank-level cost efficiency scores, obtained from stochastic frontier analysis, in addition to customary control variables. Our results provide support to the competition-fragility view for the whole Indian banking industry as well as for the different bank categories.

Keywords: Stability; Market power; Efficiency; Indian banks (search for similar items in EconPapers)
JEL-codes: D40 G21 L10 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10644-022-09387-3

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