Work detail

Competition, efficiency and soundness in banking

Author: Mgr. Alžběta Jankovská
Year: 2014 - summer
Leaders: doc. PhDr. Adam Geršl Ph.D.
Consultants:
Work type: Economic Theory
Masters
Language: English
Pages: 84
Awards and prizes:
Link: https://is.cuni.cz/webapps/zzp/detail/134079/
Abstract: There is an ongoing debate whether the impact of competition on bank soundness is positive or
negative. Traditionally, it was assumed that there is a trade-off between competition and bank
soundness. On the other hand, some recent studies suggest that competition has a positive effect
on bank soundness. In this thesis, we will focus on the concept of efficiency as a possible link between competition and bank soundness. Firstly, we will summarize different approaches to measure competition, efficiency and soundness in banking sector. Subsequently, we will focus
on hypotheses formulated to describe the link between competition in financial sector and bank
soundness, between
efficiency and bank soundness and between bank competition and
efficiency. The empirical part, we will examine whether there is a link between competition
and soundness via efficiency channel. Our analysis is based on dataset contains commercial
banks from Visegrad group during period 2008
–2012. We will exploit the Boone indicator as
a measure of competition, the SFA approach to obtain efficiency score and soundness will be
derived from z-score. The empirical evidence confirmed the positive link between
competition and bank soundness via efficiency channel

Partners

Deloitte

Sponsors

CRIF
McKinsey
Patria Finance