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Heterogeneity of business models and banking sector resilience

dc.contributor.authorMarques, Bernardo P.
dc.contributor.authorAlves, Carlos F.
dc.date.accessioned2023-11-16T19:26:55Z
dc.date.available2024-10-31T01:30:43Z
dc.date.issued2023-10-31
dc.description.abstractThis paper studies the relationship between the heterogeneity of business models and the banking sector's resilience, in light of the interplay between diversification, market power, and resilience. Our goal is to tackle the open puzzle related to the effects of diversification-induced homogeneity of banks' business models on the banking sector's stability. Using a sample of 1268 banks from 33 countries (Europe, Asia, America), for the period between 2005 and 2021, we estimate a 3SLS model that accounts for the interplay between revenue diversification, heterogeneity, market power and resilience. We apply principal components and clustering analysis to identify the banks' business models and compute an ecology-based measure of heterogeneity per country. We find that revenue diversification reduces bank heterogeneity, suggesting that banks pursue uniform diversification strategies. We also uncover a positive relationship between bank heterogeneity and market power, suggesting low rivalry among different business models. Importantly, our results indicate that bank heterogeneity positively impacts resilience and is economically significant. Namely, we estimate a 4.5% increase in the Z-score due to a one (within) standard deviation increase in business model heterogeneity. We discuss several implications of our results for micro- and macro-prudential supervision and regulation, and identify potential avenues for future research.pt_PT
dc.description.versioninfo:eu-repo/semantics/acceptedVersionpt_PT
dc.identifier.doi10.1057/s41261-023-00227-6pt_PT
dc.identifier.eid85175343238
dc.identifier.issn1745-6452
dc.identifier.urihttp://hdl.handle.net/10400.14/43127
dc.language.isoengpt_PT
dc.peerreviewedyespt_PT
dc.subjectBankingpt_PT
dc.subjectBusiness modelspt_PT
dc.subjectHeterogeneitypt_PT
dc.subjectResiliencept_PT
dc.subjectSupervision and regulationpt_PT
dc.titleHeterogeneity of business models and banking sector resiliencept_PT
dc.typejournal article
dspace.entity.typePublication
oaire.citation.titleJournal of Banking Regulationpt_PT
rcaap.rightsopenAccesspt_PT
rcaap.typearticlept_PT

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