Title Bank ownership, market structure and risk / prepared by Gianni De Nicolò and Elena Loukoianova

Published [Washington, D.C.] : International Monetary Fund, Research Dept., ©2007

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Description 1 online resource (44 pages) Series IMF working paper ; WP/07/215 IMF working paper ; WP/07/215. Contents I. Introduction; II. The Model; A. Homogenous Banks; B. Heterogenous Banks; III. A Helicopter Tour of the Data; A. Bank Asset Shares by Ownership; B. Balance Sheet Composition; C. Cost and Profitability; D. Capitalization and Loan Quality; E. Summary; IV. Evidence; A. Regression Specifications; B. Z-score Regressions; C. Theory and Evidence; D. Regressions of Z-score Components; E. Balance Sheet Composition Regressions; V. Conclusion; Appendix; References; Tables; 1. Market Shares of Banks by Ownership; 2. Asset and Liability Composition; 3. Cost and Profitability Summary This paper presents a model of a banking industry with heterogeneous banks that delivers predictions on the relationship between banks' risk of failure, market structure, bank ownership, and banks' screening and bankruptcy costs. These predictions are explored empirically using a panel of individual banks data and ownership information including more than 10,000 bank-year observations for 133 non-industrialized countries during the 1993-2004 period. Four main results obtain. First, the positive and significant relationship between bank concentration and bank risk of failure found in Boyd, De Nicolò and Al Jalal (2006) is stronger when bank ownership is taken into account, and it is strongest when state-owned banks have sizeable market shares. Second, conditional on country and firm specific characteristics, the risk profiles of foreign (state-owned) banks are significantly higher than (not significantly different from) those of private domestic banks. Third, private domestic banks do take on more risk as a result of larger market shares of both state-owned and foreign banks. Fourth, the model rationalizes this evidence if both state-owned and foreign banks have either larger screening and/or lower bankruptcy costs than private domestic banks, banks' differences in market shares, screening or bankruptcy costs are not too large, and loan markets are sufficiently segmented across banks of different ownership Bibliography Includes bibliographical references (pages 30-31) Notes Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. http://purl.oclc.org/DLF/benchrepro0212 MiAaHDL English digitized 2010 HathiTrust Digital Library committed to preserve pda MiAaHDL Print version record Subject Banks and banking -- Ownership -- Developing countries -- Econometric models Banks and banking -- Developing countries -- Econometric models Bank failures -- Developing countries -- Econometric models Bank failures -- Econometric models Banks and banking -- Econometric models Developing countries Form Electronic book Author Loukoianova, Elena, author. International Monetary Fund. Research Department, issuing body. ISBN 1283516799 9781283516792 1462300324 9781462300327 1452735980 9781452735986 9786613829245 6613829242 1451912323 9781451912326 1451867794 9781451867794

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