رابطه‌ی ثبات-تمرکز در سیستم بانکداری برزیل

In this article, the relation between non-performing loans (NPL) of the Brazilian banking system and macroeconomic factors, systemic risk, and banking concentration is empirically tested. In evaluating this relation, we use a dynamic specification with fixed effects, while using a panel data approach. The empirical results suggest that the banking concentration has a statistically significant impact on NPL, suggesting that more concentrated banking systems may improve financial stability. These results are important for the design of banking regulation policies.

The global reorganization process in the banking industry has caused an important debate on the impact that consolidation has on financial stability. The relation between the fragility of the banking system and competitiveness/concentration has been widely studied (Koskela and Stenbacka, 2000, Allen and Gale, 2004, Beck et al., 2006 and Boyd and De Nicoló, 2005). In spite of the theory that defends the idea of a trade-off between competition and stability of the banking sector, there is a lack of consensus regarding the direction of the relation, given its complexity. Despite the great number of theoretical and empirical contributions to this area of study, the evaluation of the impact of the increase in competition, which is caused by the global reorganization process of the financial systems and incentives and government programs, on the risks taken by the banks and on the banks’ stability continues to be of great importance. Many aspects of this evaluation remain unexplored, and this relationship is complex because of the existence of various idiosyncratic factors such as limited liability associated with debt contracts and the nature of asymmetric information between lenders and borrowers. This study is motivated by the lack of empirical studies that focus on the relation between concentration and stability. We also considered the relevance of that kind of research for the macro-prudential analysis of the banking sector, not to mention the relative importance of the Brazilian banking market for Latin America. The study looks to empirically test the relation between NPL of the banking system (which can be seen as a measure of financial fragility) and banking concentration, while controlling results for the effects of systemic risk (measured by the country risk and exchange rate risk) and of macroeconomic indicators, which are fairly relevant variables for emerging countries. The main intuition for a stability–concentration relationship is that in a more concentrated banking system, banks are able to diversify their loans, improving the risk-return trade-off. The results obtained in the paper suggest that this is the case in Brazil. The main contribution of this paper to the banking literature is that it presents a methodology to test the stability–concentration relationship for an emerging country. Empirical tests of this nature are not yet present in the literature. We do not attempt to find what should be the optimal level of concentration or what would be the optimal number of banks in the banking system. The remainder of the article is structured as follows. Section 2 presents a brief review of the literature. In Section 3, the methods used in the article are discussed and the sampling process is defined. The empirical results obtained are presented in Section 4. Section 5 concludes the article with the final considerations and suggestions for further research.