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Market power and risk-taking of banks: Some semiparametric evidence from emerging economies
Journal article   Peer reviewed

Market power and risk-taking of banks: Some semiparametric evidence from emerging economies

Ji Wu, Mengmeng Guo, Minghua Chen and Bang Nam Jeon
Emerging markets review, v 41, 100630
Dec 2019
DOI: https://doi.org/10.1016/j.ememar.2019.100630
Featured in Collection :   UN Sustainable Development Goals @ Drexel

Abstract

Bank risk-taking Emerging economies G15 JEL classification: G21 Market power
We investigate the impact of market power of banks on their risk-taking. Appling bank-level data from 35 emerging economies during the period of 2000–2014 to our semiparametric model of the market power-bank risk nexus with the Bayesian inference, we present consistent evidence that there is a significant nonlinear relationship between market power and risk-taking of banks. Bank stability is found bolstered with increasing market power, but this relationship tends to weaken and even reverse as banks' market power grow further over a threshold level. •This paper investigatesthe impact of market power of banks on their risk-taking.•We set up a semiparametric model and applythe Bayesian inference.•We use bank-level panel data from 35 emerging economies during 2000–2014.•We find a nonlinear relationship between market power and risk-taking of banks.•Bank stability increasesfirst and then decreaseswithmarket power.

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16 Record Views
17 citations in Web of Science
19 citations in Scopus

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UN Sustainable Development Goals (SDGs)

This publication has contributed to the advancement of the following goals:

#1 No Poverty
#8 Decent Work and Economic Growth
#10 Reduced Inequalities
#9 Industry, Innovation and Infrastructure

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Collaboration types
Domestic collaboration
International collaboration
Web of Science research areas
Business, Finance
Economics
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