The effects of government interventions in the financial sector on banking competition and the evolution of zombie banks

Calderon, Cesar and Schaeck, Klaus (2016) The effects of government interventions in the financial sector on banking competition and the evolution of zombie banks. Journal of Financial and Quantitative Analysis, 51 (4). pp. 1391-1436. ISSN 0022-1090

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Abstract

We investigate how government interventions such as blanket guarantees, liquidity support, recapitalizations, and nationalizations affect banking competition. This issue is critical for stability, access to finance, and economic growth. Exploiting cross-country and cross-time variation in the timing of interventions and accounting for their nonrandomness, we document that liquidity support, recapitalizations, and nationalizations trigger large increases in competition. We also find some more nuanced evidence that zombie banks’ market shares in crisis countries evolve together with interventions. A higher frequency of interventions coincides with greater zombie bank presence, and increases in competition are larger when zombie banks occupy bigger market shares.

Item Type: Journal Article
Journal or Publication Title: Journal of Financial and Quantitative Analysis
Uncontrolled Keywords: /dk/atira/pure/subjectarea/asjc/1400/1402
Subjects:
Departments: Lancaster University Management School > Accounting & Finance
ID Code: 73659
Deposited By: ep_importer_pure
Deposited On: 18 Jun 2015 05:39
Refereed?: Yes
Published?: Published
Last Modified: 11 Feb 2020 08:31
URI: https://eprints.lancs.ac.uk/id/eprint/73659

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