Impact of competition and concentration on bank income smoothing in Central and Eastern European countries
Purpose – This study examines the impact of competition and concentration on bank income smoothing in Central and Eastern European (CEE) countries. Design/methodology/approach – The two-step system GMM method was used to analyse the impact of competition and concentration on bank income smoothing in...
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2024-03-01
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| Series: | Journal of Economics Finance and Administrative Science |
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| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/JEFAS-11-2021-0250/full/pdf |
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| _version_ | 1850059070109646848 |
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| author | Albulena Shala Peterson K. Ozili Skender Ahmeti |
| author_facet | Albulena Shala Peterson K. Ozili Skender Ahmeti |
| author_sort | Albulena Shala |
| collection | DOAJ |
| description | Purpose – This study examines the impact of competition and concentration on bank income smoothing in Central and Eastern European (CEE) countries. Design/methodology/approach – The two-step system GMM method was used to analyse the impact of competition and concentration on bank income smoothing in 17 CEEs from 2004 to 2015. Findings – Loan loss provisions (LLPs) are negatively related to bank competition and concentration. The authors find no evidence for income smoothing using LLPs in a high-competition or high-concentration environment. Research limitations/implications – A limitation of the study is that the analysis was restricted to commercial banks. The authors did not examine investment banks or microfinance banks in this study. Also, not having access to databases does not allow them to include recent years in the study. Practical implications – CEE commercial banks will likely keep fewer provisions or engage in under-provisioning when they face intense competition, and this can expose them to credit risk, which may threaten their stability. Originality/value – This study is the first to investigate the effect of concentration and competition on income smoothing among CEE banks. |
| format | Article |
| id | doaj-art-e17507e5aaae4d20bb88b8541bab6c94 |
| institution | DOAJ |
| issn | 2077-1886 |
| language | English |
| publishDate | 2024-03-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | Journal of Economics Finance and Administrative Science |
| spelling | doaj-art-e17507e5aaae4d20bb88b8541bab6c942025-08-20T02:50:59ZengEmerald PublishingJournal of Economics Finance and Administrative Science2077-18862024-03-01295752010.1108/JEFAS-11-2021-0250Impact of competition and concentration on bank income smoothing in Central and Eastern European countriesAlbulena Shala0Peterson K. Ozili1Skender Ahmeti2Department of Banking and Finance, University of Prishtina “Hasan Prishtina”, Prishtina, KosovoFaculty of Economics, Central Bank of Nigeria, Abuja, NigeriaDepartment of Accounting, University of Prishtina “Hasan Prishtina”, Prishtina, KosovaPurpose – This study examines the impact of competition and concentration on bank income smoothing in Central and Eastern European (CEE) countries. Design/methodology/approach – The two-step system GMM method was used to analyse the impact of competition and concentration on bank income smoothing in 17 CEEs from 2004 to 2015. Findings – Loan loss provisions (LLPs) are negatively related to bank competition and concentration. The authors find no evidence for income smoothing using LLPs in a high-competition or high-concentration environment. Research limitations/implications – A limitation of the study is that the analysis was restricted to commercial banks. The authors did not examine investment banks or microfinance banks in this study. Also, not having access to databases does not allow them to include recent years in the study. Practical implications – CEE commercial banks will likely keep fewer provisions or engage in under-provisioning when they face intense competition, and this can expose them to credit risk, which may threaten their stability. Originality/value – This study is the first to investigate the effect of concentration and competition on income smoothing among CEE banks.https://www.emerald.com/insight/content/doi/10.1108/JEFAS-11-2021-0250/full/pdfLoan loss provisionsCompetitionConcentrationBanksIncome smoothing |
| spellingShingle | Albulena Shala Peterson K. Ozili Skender Ahmeti Impact of competition and concentration on bank income smoothing in Central and Eastern European countries Journal of Economics Finance and Administrative Science Loan loss provisions Competition Concentration Banks Income smoothing |
| title | Impact of competition and concentration on bank income smoothing in Central and Eastern European countries |
| title_full | Impact of competition and concentration on bank income smoothing in Central and Eastern European countries |
| title_fullStr | Impact of competition and concentration on bank income smoothing in Central and Eastern European countries |
| title_full_unstemmed | Impact of competition and concentration on bank income smoothing in Central and Eastern European countries |
| title_short | Impact of competition and concentration on bank income smoothing in Central and Eastern European countries |
| title_sort | impact of competition and concentration on bank income smoothing in central and eastern european countries |
| topic | Loan loss provisions Competition Concentration Banks Income smoothing |
| url | https://www.emerald.com/insight/content/doi/10.1108/JEFAS-11-2021-0250/full/pdf |
| work_keys_str_mv | AT albulenashala impactofcompetitionandconcentrationonbankincomesmoothingincentralandeasterneuropeancountries AT petersonkozili impactofcompetitionandconcentrationonbankincomesmoothingincentralandeasterneuropeancountries AT skenderahmeti impactofcompetitionandconcentrationonbankincomesmoothingincentralandeasterneuropeancountries |