Browsing by Author "Ferreira, Ana Cláudia Machado"
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- Are concentrated market structures beneficial for bank stability?Publication . Ferreira, Ana Cláudia Machado; Bhimiee, Diptes Chandrakante PrabhudasThe present Dissertation investigates the impact of market structure on bank stability for the U.S. commercial banks, from the last quarter of 2001 to the last quarter of 2017. The empirical analysis employs a fixed effects panel data model to address this Dissertation’s research question. The dependent variable is bank stability assessed by the natural logarithm of the Z-Score, while the explanatory variable to assess market structure is loan concentration at the state level, determined by either the Herfindahl-Hirschman Index or the three-bank concentration ratio. A matrix of control variables, including both bank-specific and macroeconomic variables, is included in the empirical framework. The empirical results support the concentration fragility view, which states that banks operating in more concentrated market structures are less stable. The results hold under a series of robustness tests. The stability of the results under diverse stress conditions suggests that regulators and policymakers must pay close attention to the market structure in which commercial banks operate when regulating banks and creating policy guidelines, namely for mergers and acquisitions