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Do competition and market structure affect sensitivity of bank profitability to the business cycle?

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dc.abstract.enThis study aims to determine whether competition and market structure explain heterogeneity in the cyclicality of bank profitability. To answer this question, we consider a large panel of individual bank-level data covering over 8000 banks in more than 100 countries. This study controls for market power and market structure as proxies for the competitive environment and net interest margin (NIM), as well as return on assets (ROA) and return on equity (ROE) as proxies for bank profitability. The results show that decreased competition is related to an increase in the procyclicality of NIM and ROA. Therefore, our results are consistent with the competition–stability perspective. A perfectly competitive environment is associated with the enhanced procyclicality of NIM and ROA in high-income countries, and with the declined procyclicality of all profitability measures in low-income countries. Market structure does statistically significantly affect profitability but seems is important only for the procyclicality of ROE.
dc.affiliationUniwersytet Warszawski
dc.contributor.authorKowalska, Iwona
dc.contributor.authorOlszak, Małgorzata
dc.date.accessioned2024-01-24T22:13:20Z
dc.date.available2024-01-24T22:13:20Z
dc.date.issued2023
dc.description.financePublikacja bezkosztowa
dc.description.volume80
dc.identifier.doi10.1016/J.PACFIN.2023.102098
dc.identifier.issn0927-538X
dc.identifier.urihttps://repozytorium.uw.edu.pl//handle/item/105293
dc.identifier.weblinkhttps://api.elsevier.com/content/article/PII:S0927538X23001695?httpAccept=text/xml
dc.languageeng
dc.pbn.affiliationeconomics and finance
dc.relation.ispartofPacific Basin Finance Journal
dc.relation.pages102098
dc.rightsClosedAccess
dc.sciencecloudnosend
dc.titleDo competition and market structure affect sensitivity of bank profitability to the business cycle?
dc.typeJournalArticle
dspace.entity.typePublication