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Jens Forssbaeck

Associate professor, Programme director – Master of Finance

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The Conditional Effects of Market Power on Bank Risk--Cross-Country Evidence

Author

  • Jens Forssbaeck
  • Choudhry Tanveer Shehzad

Summary, in English

We investigate the relationship between market power and risk for a large panel of banks worldwide. Loan and deposit market power are measured separately at bank-year level, and the risk effect of market power is conditioned on several factors predicted by theory. Both loan and deposit market power have a stable, monotonically negative effect on risk, irrespective of risk measure. The effect is larger for asset risk, and is independent of charter value and capital ratios. The effect on default risk tends to decrease in the quality of banking regulation, whereas the conditioning effects of deposit insurance protection are mixed.

Department/s

  • Department of Business Administration

Publishing year

2015

Language

English

Pages

1997-2038

Publication/Series

Review of Finance

Volume

19

Issue

5

Document type

Journal article

Publisher

Oxford University Press

Topic

  • Business Administration

Status

Published

ISBN/ISSN/Other

  • ISSN: 1572-3097