{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,4,13]],"date-time":"2026-04-13T05:57:49Z","timestamp":1776059869858,"version":"3.50.1"},"reference-count":43,"publisher":"SAGE Publications","issue":"3","license":[{"start":{"date-parts":[[2021,7,1]],"date-time":"2021-07-01T00:00:00Z","timestamp":1625097600000},"content-version":"unspecified","delay-in-days":0,"URL":"https:\/\/creativecommons.org\/licenses\/by\/4.0\/"}],"content-domain":{"domain":["journals.sagepub.com"],"crossmark-restriction":true},"short-container-title":["Sage Open"],"published-print":{"date-parts":[[2021,7]]},"abstract":"<jats:p> The analysis of the relationship between bank competition and financial stability remains a controversial issue and widely discussed in the academic and political community. Using a sample of 117 listed banks in 16 European countries for the years 2011 to 2018, the article explores the impact of market power, measured by the Lerner index, on the bank stability, measured by distance-to-default and Z score. Our results show that for the overall sample, higher market power in banking decreases the risky behavior of banks, confirming the \u201ccompetition-fragility\u201d view. We do not find any support for a U-shaped relationship between competition and bank risk-taking. However, our findings differ from previous studies pointing out that the relationship between bank competition and risk-taking is differentiated depending on whether the bank is based in a country with a more stable banking system or a less stable one. In countries with a less financially stable banking system, increased competition leads to increased bank risk-taking. In countries with a more stable banking system, market power seems not to influence banks\u2019 financial stability. Public policies must guarantee banking competition but limiting excessive bank risk-taking, especially in countries with less financially sound banking systems. The consolidation of European banking can be a key element for achieving these policies. <\/jats:p>","DOI":"10.1177\/21582440211032645","type":"journal-article","created":{"date-parts":[[2021,7,17]],"date-time":"2021-07-17T05:54:25Z","timestamp":1626501265000},"update-policy":"https:\/\/doi.org\/10.1177\/sage-journals-update-policy","source":"Crossref","is-referenced-by-count":23,"title":["Competition and Financial Stability in the European Listed Banks"],"prefix":"10.1177","volume":"11","author":[{"given":"Maria Celia","family":"L\u00f3pez-Penabad","sequence":"first","affiliation":[{"name":"University of Santiago de Compostela, Spain"}]},{"ORCID":"https:\/\/orcid.org\/0000-0002-2393-4696","authenticated-orcid":false,"given":"Ana","family":"Iglesias-Casal","sequence":"additional","affiliation":[{"name":"University of Santiago de Compostela, Spain"}]},{"ORCID":"https:\/\/orcid.org\/0000-0001-8691-7730","authenticated-orcid":false,"given":"Jos\u00e9 Fernando Silva","family":"Neto","sequence":"additional","affiliation":[{"name":"ISLA\u2014Instituto Polit\u00e9cnico de Gest\u00e3o e Tecnologia, Vila Nova de Gaia, Portugal"}]}],"member":"179","published-online":{"date-parts":[[2021,7,16]]},"reference":[{"key":"bibr1-21582440211032645","doi-asserted-by":"crossref","unstructured":"Allen F., Gale D. (2000). Financial contagion. Journal of Political Economy, 108(1), 1\u201333. https:\/\/doi.org\/10.1086\/262109","DOI":"10.1086\/262109"},{"key":"bibr2-21582440211032645","doi-asserted-by":"crossref","unstructured":"Allen F., Gale D. (2004). Competition and financial stability. Journal of Money, Credit, and Banking, 36(3b), 453\u2013480. https:\/\/doi.org\/10.1353\/mcb.2004.0038","DOI":"10.1353\/mcb.2004.0038"},{"key":"bibr3-21582440211032645","doi-asserted-by":"crossref","unstructured":"Arellano M., Bond S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277\u2013297. https:\/\/doi.org\/10.2307\/2297968","DOI":"10.2307\/2297968"},{"key":"bibr4-21582440211032645","doi-asserted-by":"crossref","unstructured":"Arellano M., Bover O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29\u201351. https:\/\/doi.org\/10.1016\/0304-4076(94)01642-D","DOI":"10.1016\/0304-4076(94)01642-D"},{"key":"bibr5-21582440211032645","doi-asserted-by":"crossref","unstructured":"Atkeson A. G., Eisfeldt A. L., Weill P.O. (2017). Measuring the financial soundness of U.S. firms, 1926\u20132012. Research in Economics, 71(3), 613\u2013635. https:\/\/doi.org\/10.1016\/j.rie.2017.05.003","DOI":"10.1016\/j.rie.2017.05.003"},{"key":"bibr6-21582440211032645","doi-asserted-by":"crossref","unstructured":"Barth J. R., Prabha A. (Penny), Swagel P. (2012). Just how big is the too-big-to-fail problem? Journal of Banking Regulation, 13(4), 265\u2013299. https:\/\/doi.org\/10.1057\/jbr.2012.13","DOI":"10.1057\/jbr.2012.13"},{"key":"bibr7-21582440211032645","doi-asserted-by":"crossref","unstructured":"Beck T., De Jonghe O., Schepens G. (2013). Bank competition and stability: Cross-country heterogeneity. Journal of Financial Intermediation, 22(2), 218\u2013244. https:\/\/doi.org\/10.1016\/j.jfi.2012.07.001","DOI":"10.1016\/j.jfi.2012.07.001"},{"key":"bibr8-21582440211032645","doi-asserted-by":"crossref","unstructured":"Beck T., Demirg\u00fc\u00e7-Kunt A., Levine R. (2006). Bank concentration, competition, and crises: First results. Journal of Banking & Finance, 30(5), 1581\u20131603. https:\/\/doi.org\/10.1016\/j.jbankfin.2005.05.010","DOI":"10.1016\/j.jbankfin.2005.05.010"},{"key":"bibr9-21582440211032645","doi-asserted-by":"crossref","unstructured":"Berger A. N., Klapper L. F., Turk-Ariss R. (2009). Bank competition and financial stability. Journal of Financial Services Research, 35(2), 99\u2013118. https:\/\/doi.org\/10.1007\/s10693-008-0050-7","DOI":"10.1007\/s10693-008-0050-7"},{"key":"bibr10-21582440211032645","doi-asserted-by":"crossref","unstructured":"Berger A. N., Udell G. F. (2004). The institutional memory hypothesis and the procyclicality of bank lending behavior. Journal of Financial Intermediation, 13(4), 458\u2013495. https:\/\/doi.org\/10.1016\/j.jfi.2004.06.006","DOI":"10.1016\/j.jfi.2004.06.006"},{"key":"bibr11-21582440211032645","doi-asserted-by":"crossref","unstructured":"Black F., Scholes M. (1973). The pricing of options and corporate liabilities. Journal of Political Economy, 81(3), 637\u2013654. https:\/\/doi.org\/10.1086\/260062","DOI":"10.1086\/260062"},{"key":"bibr12-21582440211032645","doi-asserted-by":"crossref","unstructured":"Blundell R., Bond S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115\u2013143. https:\/\/doi.org\/10.1016\/S0304-4076(98)00009-8","DOI":"10.1016\/S0304-4076(98)00009-8"},{"key":"bibr13-21582440211032645","doi-asserted-by":"publisher","DOI":"10.1111\/j.1540-6261.2005.00763.x"},{"key":"bibr14-21582440211032645","author":"Boyd J. H.","year":"1986","journal-title":"Federal Reserve Bank of Minneapolis (Quarterly Review, Spring)"},{"key":"bibr15-21582440211032645","doi-asserted-by":"crossref","unstructured":"Chan Y.S., Greenbaum S. I., Thakor A. V. (1986). Information reusability, competition and bank asset quality. Journal of Banking & Finance, 10(2), 243\u2013253. https:\/\/doi.org\/10.1016\/0378-4266(86)90008-7","DOI":"10.1016\/0378-4266(86)90008-7"},{"key":"bibr16-21582440211032645","doi-asserted-by":"crossref","unstructured":"Clark E., Radi\u0107 N., Sharipova A. (2018). Bank competition and stability in the CIS markets. Journal of International Financial Markets, Institutions and Money, 54, 190\u2013203. https:\/\/doi.org\/10.1016\/j.intfin.2017.12.005","DOI":"10.1016\/j.intfin.2017.12.005"},{"key":"bibr17-21582440211032645","unstructured":"Crosbie P., Bonh J. (2003). Modeling default risk. Moody\u2019s KMV technical document. https:\/\/www.moodysanalytics.com\/-\/media\/whitepaper\/before-2011\/12-18-03-modeling-default-risk.pdf"},{"key":"bibr18-21582440211032645","doi-asserted-by":"crossref","unstructured":"Cuestas J. C., Lucotte Y., Reigl N. (2020). Banking sector concentration, competition and financial stability: The case of the Baltic countries. Post-Communist Economies, 32(2), 215\u2013249. https:\/\/doi.org\/10.1080\/14631377.2019.1640981","DOI":"10.1080\/14631377.2019.1640981"},{"key":"bibr19-21582440211032645","doi-asserted-by":"crossref","unstructured":"Danisman G. O., Demirel P. (2019). Bank risk-taking in developed countries: The influence of market power and bank regulations. Journal of International Financial Markets, Institutions and Money, 59, 202\u2013217. https:\/\/doi.org\/10.1016\/j.intfin.2018.12.007","DOI":"10.1016\/j.intfin.2018.12.007"},{"key":"bibr20-21582440211032645","doi-asserted-by":"crossref","unstructured":"Delis M. D., Kouretas G. P. (2011). Interest rates and bank risk-taking. Journal of Banking & Finance, 35(4), 840\u2013855. https:\/\/doi.org\/10.1016\/j.jbankfin.2010.09.032","DOI":"10.1016\/j.jbankfin.2010.09.032"},{"key":"bibr21-21582440211032645","doi-asserted-by":"crossref","unstructured":"Demirg\u00fc\u00e7-Kunt A., Huizinga H. (2010). Bank activity and funding strategies: The impact on risk and returns. Journal of Financial Economics, 98(3), 626\u2013650. https:\/\/doi.org\/10.1016\/j.jfineco.2010.06.004","DOI":"10.1016\/j.jfineco.2010.06.004"},{"key":"bibr22-21582440211032645","doi-asserted-by":"crossref","unstructured":"Demirg\u00fc\u00e7-Kunt A., Huizinga H. (2013). Are banks too big to fail or too big to save? International evidence from equity prices and CDS spreads. Journal of Banking & Finance, 37(3), 875\u2013894. https:\/\/doi.org\/10.1016\/j.jbankfin.2012.10.010","DOI":"10.1016\/j.jbankfin.2012.10.010"},{"key":"bibr23-21582440211032645","author":"European Banking Federation","year":"2019","journal-title":"Banking in Europe: EBF facts & figures 2019"},{"key":"bibr24-21582440211032645","doi-asserted-by":"crossref","unstructured":"Fu X. (Maggie), Lin Y. (Rebecca), Molyneux P. (2014). Bank competition and financial stability in Asia Pacific. Journal of Banking & Finance, 38, 64\u201377. https:\/\/doi.org\/10.1016\/j.jbankfin.2013.09.012","DOI":"10.1016\/j.jbankfin.2013.09.012"},{"key":"bibr25-21582440211032645","doi-asserted-by":"crossref","unstructured":"Hansen L. P. (1982). Large sample properties of generalized method of moments estimators. Econometrica, 50(4), 1029\u20131054. https:\/\/doi.org\/10.2307\/1912775","DOI":"10.2307\/1912775"},{"key":"bibr26-21582440211032645","doi-asserted-by":"crossref","unstructured":"Jim\u00e9nez G., Lopez J. A., Saurina J. (2013). How does competition affect bank risk-taking? Journal of Financial Stability, 9(2), 185\u2013195. https:\/\/doi.org\/10.1016\/j.jfs.2013.02.004","DOI":"10.1016\/j.jfs.2013.02.004"},{"issue":"5","key":"bibr27-21582440211032645","first-page":"1183","volume":"80","author":"Keeley M. C.","year":"1990","journal-title":"The American Economic Review"},{"key":"bibr28-21582440211032645","unstructured":"Koetter M., Kolari J. W., Spierdijk L. (2008). Efficient competition? Testing the \u00abquiet life\u00bb of U.S. banks with adjusted Lerner indices? [Working paper]. Groningen University."},{"key":"bibr29-21582440211032645","doi-asserted-by":"crossref","unstructured":"Leroy A., Lucotte Y. (2017). Is there a competition-stability trade-off in European banking? Journal of International Financial Markets, Institutions and Money, 46, 199\u2013215. https:\/\/doi.org\/10.1016\/j.intfin.2016.08.009","DOI":"10.1016\/j.intfin.2016.08.009"},{"key":"bibr30-21582440211032645","doi-asserted-by":"crossref","unstructured":"Lind J. T., Mehlum H. (2010). With or without U? The appropriate test for a U-shaped relationship. Oxford Bulletin of Economics and Statistics, 72(1), 109\u2013118. https:\/\/doi.org\/10.1111\/j.1468-0084.2009.00569.x","DOI":"10.1111\/j.1468-0084.2009.00569.x"},{"key":"bibr31-21582440211032645","doi-asserted-by":"crossref","unstructured":"Marcus A. J. (1984). Deregulation and bank financial policy. Journal of Banking & Finance, 8(4), 557\u2013565. https:\/\/doi.org\/10.1016\/S0378-4266(84)80046-1","DOI":"10.1016\/S0378-4266(84)80046-1"},{"key":"bibr32-21582440211032645","doi-asserted-by":"crossref","unstructured":"Marquez R. S. (2002). Competition, adverse selection, and information dispersion in the banking industry. Review of Financial Studies, 15, 901\u2013926. https:\/\/doi.org\/10.2139\/ssrn.264531","DOI":"10.1093\/rfs\/15.3.901"},{"key":"bibr33-21582440211032645","doi-asserted-by":"crossref","unstructured":"Martinez-Miera D., Repullo R. (2010). Does competition reduce the risk of bank failure? The Review of Financial Studies, 23(10), 3638\u20133664. https:\/\/doi.org\/10.1093\/rfs\/hhq057","DOI":"10.1093\/rfs\/hhq057"},{"key":"bibr34-21582440211032645","doi-asserted-by":"crossref","unstructured":"Matutes C., Vives X. (1996). Competition for deposits, fragility, and insurance. Journal of Financial Intermediation, 5(2), 184\u2013216. https:\/\/doi.org\/10.1006\/jfin.1996.0010","DOI":"10.1006\/jfin.1996.0010"},{"key":"bibr35-21582440211032645","doi-asserted-by":"crossref","unstructured":"Merton R. C. (1974). On the pricing of corporate debt: The risk structure of interest rates. The Journal of Finance, 29(2), 449\u2013470. https:\/\/doi.org\/10.2307\/2978814","DOI":"10.1111\/j.1540-6261.1974.tb03058.x"},{"key":"bibr36-21582440211032645","doi-asserted-by":"crossref","unstructured":"Mishkin F. S. (1999). Financial consolidation: Dangers and opportunities. Journal of Banking & Finance, 23(2), 675\u2013691. https:\/\/doi.org\/10.1016\/S0378-4266(98)00084-3","DOI":"10.1016\/S0378-4266(98)00084-3"},{"key":"bibr37-21582440211032645","unstructured":"Rosenblum H. (2011). Choosing the road to prosperity: Why we must end too big to fail\u2014Now [Annual report], pp. 3\u201324. https:\/\/www.dallasfed.org\/~\/media\/documents\/educate\/events\/2012\/12summitrosenblum.pdf"},{"key":"bibr38-21582440211032645","doi-asserted-by":"crossref","unstructured":"S\u00e1ez L., Shi X. (2004). Liquidity pools, risk sharing, and financial contagion. Journal of Financial Services Research, 25(1), 5\u201323. https:\/\/doi.org\/10.1023\/B:FINA.0000008662.59653.33","DOI":"10.1023\/B:FINA.0000008662.59653.33"},{"key":"bibr39-21582440211032645","doi-asserted-by":"crossref","unstructured":"Schaeck K. \u010cih\u00e1k M. (2010). Competition, efficiency, and soundness in banking: An industrial organization perspective (SSRN Scholarly Paper ID 1635245). Social Science Research Network. https:\/\/papers.ssrn.com\/abstract=1635245","DOI":"10.2139\/ssrn.1542483"},{"key":"bibr40-21582440211032645","doi-asserted-by":"crossref","unstructured":"Turk Ariss R. (2010). On the implications of market power in banking: Evidence from developing countries. Journal of Banking & Finance, 34(4), 765\u2013775. https:\/\/doi.org\/10.1016\/j.jbankfin.2009.09.004","DOI":"10.1016\/j.jbankfin.2009.09.004"},{"key":"bibr41-21582440211032645","doi-asserted-by":"publisher","DOI":"10.1111\/j.1540-6261.2004.00650.x"},{"key":"bibr42-21582440211032645","doi-asserted-by":"crossref","unstructured":"Williamson S. D. (1986). Costly monitoring, financial intermediation, and equilibrium credit rationing. Journal of Monetary Economics, 18(2), 159\u2013179. https:\/\/doi.org\/10.1016\/0304-3932(86)90074-7","DOI":"10.1016\/0304-3932(86)90074-7"},{"key":"bibr43-21582440211032645","doi-asserted-by":"crossref","unstructured":"Windmeijer F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators. Journal of Econometrics, 126(1), 25\u201351. https:\/\/doi.org\/10.1016\/j.jeconom.2004.02.005","DOI":"10.1016\/j.jeconom.2004.02.005"}],"container-title":["Sage Open"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/journals.sagepub.com\/doi\/pdf\/10.1177\/21582440211032645","content-type":"application\/pdf","content-version":"vor","intended-application":"text-mining"},{"URL":"https:\/\/journals.sagepub.com\/doi\/full-xml\/10.1177\/21582440211032645","content-type":"application\/xml","content-version":"vor","intended-application":"text-mining"},{"URL":"https:\/\/journals.sagepub.com\/doi\/pdf\/10.1177\/21582440211032645","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2025,3,1]],"date-time":"2025-03-01T21:02:31Z","timestamp":1740862951000},"score":1,"resource":{"primary":{"URL":"https:\/\/journals.sagepub.com\/doi\/10.1177\/21582440211032645"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2021,7]]},"references-count":43,"journal-issue":{"issue":"3","published-print":{"date-parts":[[2021,7]]}},"alternative-id":["10.1177\/21582440211032645"],"URL":"https:\/\/doi.org\/10.1177\/21582440211032645","relation":{},"ISSN":["2158-2440","2158-2440"],"issn-type":[{"value":"2158-2440","type":"print"},{"value":"2158-2440","type":"electronic"}],"subject":[],"published":{"date-parts":[[2021,7]]},"article-number":"21582440211032645"}}