Measuring Competition and Stability: Recent Evidence for European Banking

Liu, H., Molyneux, P. and Wilson, J.O.S. (2010) Measuring Competition and Stability: Recent Evidence for European Banking. Working Paper. Istituto Luigi Einaudi per gli Studi Bancari Finanziari e Assicurativi, Italy.

Abstract

This paper uses a variety of structural and non-structural measures (including the Lerner index, Rosse-Panzar H-statistic and Profits-Persistence parameters) to gauge competitive conditions in 11 European banking systems over 1997 to 2008. As in Carbo et al. (2009) we find that competition measures tend to provide inconsistent results and the measures are statistically unrelated. We also find that our banking sector risk measures (Z-score, loan-loss provisions, variation in ROE and ROA) are unrelated to the various competition measures. This raises doubts about the generalisability of the findings of previous empirical studies that investigate competitionstability and competition-fragility issues.

• Item Type: Research Reports or Papers (Working Paper)
• Status: Published
• Glasgow Author(s) Enlighten ID: Liu, Professor Frank
• Authors: Liu, H., Molyneux, P., and Wilson, J.O.S.
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Publisher: Istituto Luigi Einaudi per gli Studi Bancari Finanziari e Assicurativi