The weak applicability of the SCP paradigm in banking sector could additionally be attributed to the different bank characteristics similar to switching cost of retail borrowings, data asymmetries in company borrowings, and network externalities within the cost system . A number of bank-specific, regulatory, and macroeconomic variables are controlled in inspecting the relationship between competitors and financial stability. Bank-specific management variables are financial institution dimension, property composition, operational efficiency, and overseas possession. This is managed as Liu, Molyneux argue that enormous banks may take more risk because of higher market power; thus, dimension significantly effects a bank’s monetary stability. The belongings composition, which is the ratio of internet loan to complete assets, is also managed as this measures banks’ lending behaviour.
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Measures of competition were used as main explanatory variables which embody each non-structural measures, similar to H-statistic and Lerner Index and … Read More