The elusive effect of bank size on profits |
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Authors: | Meng-Wen Wu Chung-Hua Shen |
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Institution: | 1. Department of Business Administration , National Taipei University , 151, University Road, San Shia District, New Taipei City, 23741, Taiwan, Republic of China mwwu@mail.ntpu.edu.tw;3. Department of Finance , National Taiwan University , No. 1, Section 4, Roosevelt Road, Taipei, 10617, Taiwan, Republic of China |
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Abstract: | This study investigates the determinants of bank profit while paying particular attention to the influence of market share on profit, referred as the market share effect. The research seeks to answer the question whether the market share effect is conditional upon four country institutional factors including concentration ratio, bank regulations, the government's governance and country wealth, and is thus better in explaining the mixed results in the literature. This study employs comprehensive data of 44 countries from 1998 to 2004. The results show that market share positively influences profit when no country institutional factors are considered, but further strengthened in countries that are characterized by high concentration ratios, high restrictions on bank activities in insurance and real estate, good investor protection and a strong rule of law. |
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Keywords: | market share bank profit market structure government governance |
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