A reexamination on the effect of bank competition on bank non-performing loans

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4 Citations (Scopus)

Abstract

This article examines whether competition in the deposit and loan markets results in a more stable or fragile banking industry. Following the assumption that deposit and loan competitions are not separable, a simple equilibrium model is developed. Then, using the aggregate time-series data of Federal Deposit Insurance Corporation (FDIC)-insured financial institutions, we estimate the generalized VAR model of deposit rate (DR), interest margin between the loan and DRs, and non-performing loan ratio. Our results support the competition–fragility hypothesis.

Original languageEnglish
Pages (from-to)6165-6173
Number of pages9
JournalApplied Economics
Volume50
Issue number57
DOIs
Publication statusPublished - 2018 Dec 8

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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