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on Confederation of Independent States |
| By: | Fidrmuc, Jarko; Süß, Philipp Johann |
| Abstract: | Russian banks have been strongly influenced by the worldwide financial crisis which started in the second half of 2008. This was caused by a combination of domestic, regional and international factors. We estimate an early warning model for the Russian crisis. We identified 47 Russian banks which failed after September 2008. Using the Bankscope data set, we show that balance sheet indicators were informative about possible failures of these banks as early as 2006. The early predictive indicators include especially equity, net interest revenues, return on average equity, net loans, and loan loss reserves. |
| Keywords: | Banking and financial crisis; early warning models; Russia; Logit. |
| JEL: | G33 G21 C25 |
| Date: | 2009–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:10996&r=cis |
| By: | Fungacova, Zuzana (BOFIT); Weill, Laurent (BOFIT) |
| Abstract: | There has been a notable debate in the banking literature on the impact of bank competition on financial stability. While the dominant view sees a detrimental impact of competition on the stability of banks, this view has recently been challenged by Boyd and De Nicolo (2005) who see the reverse effect. The aim of this paper is to contribute to this literature by providing the first empirical investigation of the role of bank competition on the occurrence of bank failures. We analyze this issue based on a large sample of Russian banks over the period 2001-2007 and employ the Lerner index as the metric of bank competition. The Russian banking industry is a unique example of an emerging market which has undergone a large number of bank failures during the last decade. Our findings clearly support the view that tighter bank competition is detrimental for financial stability. This result is robust to tests controlling for the measurement of market power, the definition of bank failure, the set of control variables, and the particular linear specification of the relationship. The normative implication of our findings is therefore that measures that increase bank competition could undermine financial stability. |
| Keywords: | bank competition; bank failure; Russia |
| JEL: | G21 P34 |
| Date: | 2009–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2009_012&r=cis |