COMPARATIVE STUDIES OF RISK, CONCENTRATION AND EFFICIENCY IN TRANSITION ECONOMIES

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Abstract

This paper compares the risk taking behaviour of banks in two groups of early and late transition countries during two periods: the pre-crisis (2000-2006) and the financially turbulent (2007-2012). Using data for 254 banks for the period 2000-2012 we find that during the stable period (2000-2006) the banks with higher concentration and higher technical efficiency take more risks in the late transition countries, while this is ambiguous for the turbulent period (2007-2012). This supports the ‘competition-stability’ hypothesis during the stable period (2000-2006) for the late transition countries. Although the concentration ratio did not change much in the early transition countries for the periods 2000-2006 and 2007-2012, the banks with higher concentration and higher technical efficiency tend to take less risks during the stable period (2000-2006), but more during the turbulent period (2007-2012).

Keywords: Transition Economies, Bank Concentration, Technical Efficiency, Risk

How to cite this paper: Djalilov, K., Lyeonov, S., Buriak, A. (2015). Comparative studies of risk, concentration and efficiency in transition economies. Risk governance & control: Financial markets & institutions, 5(4-1), 177-186. https://doi.org/10.22495/rgcv5i4c1art7