The Impact of Bank Concentration on Financial Distress: The Case of the European Banking System | Zendy

Andrea Cipollini | Zendy; Franco Fiordelisi | Zendy

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The Impact of Bank Concentration on Financial Distress: The Case of the European Banking System

Author(s) -

Andrea Cipollini,

Franco Fiordelisi

Publication year - 2009

Publication title -

ssrn electronic journal

Language(s) - English

Resource type - Journals

ISSN - 1556-5068

DOI - 10.2139/ssrn.1578718

Subject(s) - financial system , business , financial distress , international banking , distress , medicine , clinical psychology

This paper examines the impact of bank concentration on bank financial distress using a balanced panel of commercial banks belonging to EU 25 over the sample period running from 2003 to 2007. Financial distress is proxied by the observations falling below a given threshold of the empirical distribution of a risk adjusted indicator of bank performance: the Shareholder Value ratio. We employ a panel probit regression estimated by GMM in order to obtain consistent and efficient estimates following the suggestion of Bertschek and Lechner (1998). Our findings suggest, after controlling for a number of enviroment variables, a positive effect of bank concentration on financial distress.

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