Naujųjų ES valstybių bankinio sektoriaus priežiūra, konkurencija ir stabilumas
SUPERVISION, COMPETITION AND STABILITY OF A BANKING SECTOR IN NEW

Summary/Abstract: Nowadays - in time of financial market liberalization and globalization, capitalization, electronic commerce - the banking sector faces many challenges. Questions how to stay competitive usually are linked with financial stability and the necessity of supervision in this expanding banking sector. Therefore, the main goal of this paper is to analyze the correlation between stability, supervision and competition in a banking sector in the twelve European Union countries. Variuos researches and economists distinguish three main goals of the financial system's supervision and the banking sector: maintenance of stability, encouragement of competition and transparency. Stability is understood as the prevention of financial crisis and is related with effective maintenance. This is closely related with concentration in a banking sector. Concentration in the twelve European Union countries is high and it is estimated according to the number of banks that fall on 10 000 citizens and Herfindahl - Hirschman index. The research in this paper is based on correlations between: supervision and stability, supervision and competition, competition and stability; and these correlations are reviewed. In order to find a connection between competition in a banking sector and the level of supervision, there were analysed Herfindahl - Hirschman index and a number of supervision institutions in the countries. As a result, any direct connection between those two factors was not found, however it was noticed that the average concentration is bigger in those countries where only one supervision institution exists. Financial stability the authors estimated according to the ROA, ROE and the payment level data in twelve European Union countries. It was assumed that when competition is stronger, stability in a banking sector should be in a lower level, because banks are used to take more aggressive competitive strategies. This assumption was not approved because when competition between banks grows, stability in a banking sector does not change. The same correlation is noticed between the number of supervision institutions and stability in a banking sector: a good number of supervision institutions do not increase the level of stability. This means that supervision institutions do not have strong influence on the financial results of banking activities.

• Details
• Contents