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Another Look at “Bank Competition and Financial Stability: Much Ado about Nothing?”

Samangi Bandaranayake, Kuntal Das () and W. Reed ()

Working Papers in Economics from University of Canterbury, Department of Economics and Finance

Abstract: This study replicates Zigraiova and Havranek’s (2016) meta-analysis of banking competition and financial stability. It performs multiple types of replications: a “Reproduction” replication where Z&H’s data and code are verified to reproduce the results of their study; a “Repetition” replication where the studies used by Z&H are independently recoded and then re-analyzed; an “Extension” replication where additional studies on banking competition and stability are analyzed; and a “Robustness Analysis” where we check Z&H’s results using an alternative empirical procedure. Our analysis strongly confirms Z&H’s main finding that competition in the banking sector has an economically negligible effect on financial stability. This result is consistently confirmed across a variety of replication analyses. Most impressively, we confirm their finding even when we analyze a completely independent set of 35 studies not included in Z&H’s meta-analysis. Our results for Z&H’s other findings are less supportive. As the first comprehensive replication of a meta-analysis, this study also provides insights into the robustness of meta-analysis. We find that meta-regression analysis, where estimated effects are related to data, estimation, and study characteristics, is sensitive to how data are coded and to the choice of estimation procedure; and that this sensitivity extends to “best practice” estimates.

Keywords: Bank competition; financial stability; Bayesian model averaging; meta-analysis; publication selection; replication (search for similar items in EconPapers)
JEL-codes: C41 G21 G28 L11 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2019-08-01
New Economics Papers: this item is included in nep-ban and nep-com
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