Financial Sector Transparency, Financial Crises And Market Power A Cross-Country Evidence
Date
2020
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
International Journal of Finance & Economics
Abstract
The study investigates how financial sector transparency moderates the influence of financial crises on bank market power across 75 economies between
2004 and 2014. Using two-step dynamic system, the generalized method of
moments the study shows that while public sector-led financial sector transparency reduces bank market power, private sector-led financial sector transparency promotes bank market power, given that private sector-led
transparency gives financially sound banks an advantage in solidifying market power and dominance. Similarly, while financial crises reduce
the market power of banks, implying that during financial crises, banks lose
their market power, financial sector transparency promotes the negative effect
of financial crises on bank market power. This implies that during financial
crises, financial sector transparency, whether enforced through private or public sector, boosts the weakening effect of financial crises on bank market
power. These findings imply that regulators can rely on financial transparency
to tame bank market power and enhance banking competitiveness. The findings
and results are consistent even when country, time and continental effects are
controlled for.
Description
Research Article
Keywords
bank, market power, private sector