Institutional diversity in domestic banking sectors and bank stability: A cross-country study

Arbeitspapier

This paper analyzes the causal relationship between institutional diversity in domestic banking sectors and bank stability. We use a large bank- and country-level unbalanced panel data set covering the EU member states' banking sectors between 1998 and 2014. Constructing two distinct indicators for measuring institutional diversity, we find that a high degree of institutional diversity in the domestic banking sector positively affects bank stability. The positive relationship between domestic institutional diversity and bank stability is stronger in times of crisis, providing evidence that diversity can help to absorb both financial and real shocks. In particular, greater institutional diversity smooths bank earnings risk in times of crisis. Our results are economically meaningful and offer important insights to the ongoing economic policy debate on how to reshape the architecture of the banking sector.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: DIW Discussion Papers ; No. 1869

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Financial Crises ; Financial Institutions and Services: General ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financial Institutions and Services: Government Policy and Regulation
• Thema: Institutional Diversity ; Shannon Index ; Gini-Simpson Index ; Bank Stability ; Financial Crisis ; Bank Competition

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Baum, Christopher F. ; Grazzini, Caterina Forti ; Schäfer, Dorothea
• Ereignis: Veröffentlichung
• (wer): Deutsches Institut für Wirtschaftsforschung (DIW)
• (wo): Berlin
• (wann): 2020

Weitere Informationen

• Handle: http://hdl.handle.net/10419/218990
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ