Browsing by Author "Wolfe, S."
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Item Does bank competition and diversification lead to greater stability?Evidence from emerging markets(Science Direct, 2013-08-14) Amidu, M.; Wolfe, S.This paper investigates how the level of competition affects diversification and stability using a sample of 978 banks in 55 emerging anddeveloping countries over an eight year period 2000–2007. We shed further light on the competition-stability nexus by examining the complexinteraction between three key variables: the degree of bank market power, diversification and stability. The core finding is that competition increasesstability as diversification across and within both interest and non-interest income generating activities of banks increases. Our analysis identifiesrevenue diversification as a channel through which competition affects bank insolvency risk in emerging countries. The results are robust to anarray of controls including alternative methodology, variable specifications and the regulatory environments that banks operate in.Item The effects of banking market structure on the lending channel: Evidence from emerging markets(2013) Amidu, M.,; Wolfe, S.This paper analyses the extent to which the level of bank competition influences monetary policy transmission. Using a large panel dataset of 978 banks from 55 countries, and employing the Lerner index model as a measure of market structure, our results show that an increase in banking sector competition weakens the effectiveness of monetary policy on bank lending. The findings are robust to a broad array of sensitivity checks including control of alternative measurements of the Lerner index, different samples and different methodological specifications. By extension, these results have important policy implications for regulators in assessing the effectiveness of monetary policy transmission mechanisms.Item The impact of market power and funding strategy on bank interest margins(2013) Amidu, M.,; Wolfe, S.This paper investigates the implications of market power and funding strategies for bank-interest margins, using a sample of 978 banks in 55 emerging and developing countries over an eight-year period, 2000–2007. We provide additional insight by examining the complex interlocking of three key variables that are important for regulators: the degree of market power, funding sources and bank performance. The results show that market power increases when banks use internal funding to diversify into non-interest income-generating activities. We also find that the high net-interest margins of banks in emerging and developing countries can be explained by the degree of market power, credit risk, and implicit interest payments. In addition, our results suggest that interest margins among banks with market power are significantly more sensitive to internally generated funds than they are to deposit and wholesale funding.