MARKET POWER AND BANKING FAILURE IN WAEMU ZONE: AN EMPIRICAL STUDY THROUGH GMM ESTIMATOR

Authors

  • PRAO Yao Séraphin Associate Professor at Alassane Ouattara University (Bouaké) /LAMPE- Laboratory of Economic Policies’ Analysis and Modeling, Ivory Coast
  • BAKAYOKO Mamadou Ph.D student at Alassane Ouattara University (Bouaké) /LAMPE - Laboratory of Economic Policies’ Analysis and Modeling, Ivory Coast

DOI:

https://doi.org/10.58885/ijbe.v08i2.009.ps

Keywords:

Market power, Default risk, GMM, WAEMU.

Abstract

This paper examines the relationship between market power and default risk for WAEMU banks. We use a dataset of 72 WAEMU banks from 2013 to 2020. The econometric results, after applying the system GMM estimator of Blundell and Bond (1998), indicate that bank concentration increases bank default risk. However, the test of non-linearity, through the introduction of the quadratic term of the concentration measure into the model, shows that above the 83% concentration threshold, an increase in market power could be favorable to banking stability. This study, therefore, recommends that monetary authorities exercise caution in their efforts to promote competition.

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Published

2023-08-30

How to Cite

PRAO Yao Séraphin, & BAKAYOKO Mamadou. (2023). MARKET POWER AND BANKING FAILURE IN WAEMU ZONE: AN EMPIRICAL STUDY THROUGH GMM ESTIMATOR. International Journal of Business & Economics (IJBE), 8(2), 9–31. https://doi.org/10.58885/ijbe.v08i2.009.ps

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