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The impact of bank concentration on financial distress: the case of the European banking system

Andrea Cipollini () and Franco Fiordelisi

Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) from Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi"

Abstract: This paper examines the impact of bank concentration on bank financial distress using a balanced panel of commercial banks belonging to EU 25 over the sample period running from 2003 to 2007. Financial distress is proxied by the observations falling below a given threshold of the empirical distribution of a risk adjusted indicator of bank performance: the Shareholder Value ratio. We employ a panel probit regression estimated by GMM in order to obtain consistent and efficient estimates following the suggestion of Bertschek and Lechner (1998). Our findings suggest, after controlling for a number of enviroment variables, a positive effect of bank concentration on financial distress.

Keywords: EVA; Banking; Panel Probit; GMM (search for similar items in EconPapers)
JEL-codes: C33 C35 G21 G32 (search for similar items in EconPapers)
Pages: pages 23
Date: 2009-02
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Persistent link: https://EconPapers.repec.org/RePEc:mod:wcefin:0014

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