Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/120440 
Year of Publication: 
2015
Series/Report no.: 
IES Working Paper No. 7/2015
Publisher: 
Charles University in Prague, Institute of Economic Studies (IES), Prague
Abstract: 
The theoretical literature gives conflicting predictions on how bank competition should affect financial stability, and dozens of researchers have attempted to evaluate the relationship empirically. We collect 598 estimates of the competitionstability nexus reported in 31 studies and analyze the literature using meta-analysis methods. We control for 35 aspects of study design and employ Bayesian model averaging to tackle the resulting model uncertainty. Our findings suggest that the definition of financial stability and bank competition used by researchers influences their results in a systematic way. The choice of data, estimation methodology, and control variables also affects the reported coefficient. We find evidence for moderate publication bias. Taken together, the estimates reported in the literature suggest little interplay between competition and stability, even when corrected for publication bias and potential misspecifications.
Subjects: 
Bayesian model averaging
bank competition
financial stability
publication selection bias
meta-analysis
JEL: 
C83
C11
G21
L16
Document Type: 
Working Paper

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