Bank Concentration, Competition, and Financial Inclusion
TL;DR: In this paper, the authors employ a large panel of countries, several indicators of financial inclusion and a comprehensive set of bank competition measures to study the role of banking system structure as a determinant of cross-country variability in financial outreach for households.
About: This article is published in Review of Development Finance.The article was published on 2018-06-01 and is currently open access. It has received 60 citations till now. The article focuses on the topics: Financial inclusion & Financial services.
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TL;DR: In this article, a comprehensive review of the recent evidence on financial inclusion from all the regions of the world is presented. And the emerging themes in the financial inclusion literature are identified a...
Abstract: This paper provides a comprehensive review of the recent evidence on financial inclusion from all the regions of the World. It identifies the emerging themes in the financial inclusion literature a...
97 citations
TL;DR: In this paper, the authors use the IMF's Financial Accommodation Program (FAAP) as a key enabler for promoting equal opportunity and reducing poverty in the developing world.
Abstract: Recent years have witnessed a global commitment to advancing financial inclusion as a key enabler for promoting equal opportunity and reducing poverty. In this paper, we use the IMF’s Financial Acc...
62 citations
TL;DR: In this article, the authors investigated the effect of financial inclusion on financial stability in the banking system and found that financial inclusion through access to payments and savings accounts has a neutral or positive effect on the financial stability.
32 citations
TL;DR: In this article, the authors propose a literature review on the main determinants of bank lending and risk-taking decisions, going through the competition in the banking market, the bank connectedness with firms and the role of monetary and banking authorities.
23 citations
25 May 2021-Competitiveness Review: An International Business Journal Incorporating Journal of Global Competitiveness
TL;DR: In this paper, the authors investigated the relationship between financial inclusion, competition concentration and financial stability and found a U-shaped inclusion-stability relationship, which is consistent and robust to alternative econometric tests.
Abstract: Since the strike of the 2007-2008 global financial crises, financial stability has been discussed with immense interest in academic and policy circles. Following this essence, this paper aims to investigate the nexus of financial inclusion, competition concentration and financial stability.,To analyze this relationship, this study uses different inclusion indices constructed by principle component analysis, Boon indicator, different concentration measures and Z-score, for a sample of 92 countries and subsamples based on income and economic grouping of those countries as well as for pre- and post-crisis episodes over the period of 2004-2014. This study also investigates the variation in inclusion–stability relationships in the presence of competition and concentration. This study uses two-step system-generalized method of moments (GMM) and two-stage least square to address the endogeneity.,The study finds that competition contributes to stability; however, there is evidence of fragility in the presence of concentration in the banking industry. Moreover, this study finds a U-shaped inclusion–stability relationship. The overall results of this study support the competition–stability view and a trade-off between inclusion and stability, which are consistent and robust to alternative econometric tests.,Financial inclusion should be endorsed with caution in low-income, middle-income and emerging countries, and prudent policies should be taken to govern the market concentration to maintain financial stability.,To the best of the authors’ knowledge, this paper is the first to explain the impact of financial inclusion on financial stability in the presence of market heterogeneity.
23 citations
References
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TL;DR: In this article, the generalized method of moments (GMM) estimator optimally exploits all the linear moment restrictions that follow from the assumption of no serial correlation in the errors, in an equation which contains individual effects, lagged dependent variables and no strictly exogenous variables.
Abstract: This paper presents specification tests that are applicable after estimating a dynamic model from panel data by the generalized method of moments (GMM), and studies the practical performance of these procedures using both generated and real data. Our GMM estimator optimally exploits all the linear moment restrictions that follow from the assumption of no serial correlation in the errors, in an equation which contains individual effects, lagged dependent variables and no strictly exogenous variables. We propose a test of serial correlation based on the GMM residuals and compare this with Sargan tests of over-identifying restrictions and Hausman specification tests.
26,580 citations
TL;DR: The authors showed that countries with poorer investor protections, measured by both the character of legal rules and the quality of law enforcement, have smaller and narrower capital markets than those with stronger investor protections.
Abstract: Using a sample of 49 countries, we show that countries with poorer investor protections, measured by both the character of legal rules and the quality of law enforcement, have smaller and narrower capital markets. These findings apply to both equity and debt markets. In particular, French civil law countries have both the weakest investor protections and the least developed capital markets, especially as compared to common law countries.
10,005 citations
TL;DR: In this paper, the authors developed a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders, and presented a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary.
Abstract: This paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders. It presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary. Diversification within an intermediary serves to reduce these costs, even in a risk neutral economy. The paper presents some more general analysis of the effect of diversification on resolving incentive problems. In the environment assumed in the model, debt contracts with costly bankruptcy are shown to be optimal. The analysis has implications for the portfolio structure and capital structure of intermediaries.
7,982 citations
Book•
01 Jan 1982
TL;DR: In this article, the authors present a cost minimization model for a multi-product competitive industry in perfectly contestable markets, where the single product case is considered and the multiproduct case is assumed to be monopoly equilibrium.
Abstract: Objectives and Orientation. Industry Structure and Performance in Perfectly Contestable Markets: The Single Product Case. Ray Behavior and Multiproduct Returns to Scale. Cost Concepts Applicable to Multiproduct Cases. The Cost-Minimizing Industry Structure. Input-Price Changes, Cost Functions, And Efficient Industry Structure. Natural Monopoly: Sufficient Conditions for Subaddivity. Monopoly Equilibrium. Equilibrium in the Multiproduct Competitive Industry. Fixed Costs, Sunk Costs, Entry Barriers, Public Goods, And Sustainability of Monopoly. Sustainable Industry Configurations: General Industry Structures in Contestable Markets. Powers of the Market Mechanism. Intertemporal Sustainability. Intertemporal Unsustainability. Toward Empirical Analysis. Toward Application of the Theory. Developments Since the Book. Bibliography. Index.
4,055 citations
TL;DR: The authors showed that the extent of competition in credit markets is important in determining the value of lending relationships and that creditors are more likely to finance credit constrained firms when credit markets are concentrated because it is easier for these creditors to internalize the benefits of assisting the firms.
Abstract: This paper provides a simple model showing that the extent of competition in credit markets is important in determining the value of lending relationships. Creditors are more likely to finance credit constrained firms when credit markets are concentrated because it is easier for these creditors to internalize the benefits of assisting the firms. The model has implications about the availability and the price of credit as firms age in different markets. The paper offers evidence for these implications from small business data. It concludes with conjectures on the costs and benefits of liberalizing financial markets, as well as the timing of such reforms.
3,259 citations