The Effect of Diversification of Banking Products on the Relationship between Market Power and Financial Stability

Sami Mensi, Widede Labidi
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引用次数: 9

Abstract

In the context of financial liberalization, increased competition has spurred financial institutions to develop new products and new activities in order to meet demand, market development and increased competitiveness. This has made the relationship between market structure and financial stability more complicated and its study through the channel of diversification remains an unexplored area. The purpose of this paper is to test the interaction between market power, diversification and financial (in) stability. To this end, we examine a sample of 18 countries in the MENA region and 157 commercial banks during the period 2000-2013. Supporting the "competition-instability" hypothesis, our results revealed that low market power banks in the MENA region are less robust and more unstable when they less or poorly diversify their activities. Moreover, financial instability in this sector may result from a fierce competition among banks born from the desire to distinguish themselves by offering various nontraditional products, for which banks lack the experience to control its risks.
银行产品多元化对市场力量与金融稳定关系的影响
在金融自由化的背景下,竞争加剧促使金融机构开发新产品和新活动,以满足需求、市场发展和提高竞争力。这使得市场结构与金融稳定的关系更加复杂,通过多元化渠道对其进行研究仍然是一个未开发的领域。本文的目的是检验市场力量、多元化和金融稳定性之间的相互作用。为此,我们研究了2000年至2013年期间中东和北非地区18个国家和157家商业银行的样本。为了支持“竞争不稳定”假说,我们的研究结果显示,中东和北非地区市场支配力较低的银行在其业务多样化程度较低或较差时,其稳健程度较低,也更不稳定。此外,银行之间的激烈竞争可能会导致该领域的金融不稳定,因为银行希望通过提供各种非传统产品来区分自己,而银行缺乏控制风险的经验。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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