Friday, September 22, 2023

IF China sneezes who will survive

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China’s current economic situation versus the former. If China sneezes who will survive? Using a balanced data set of 78 European commercial banks over the period 2006-2016, this study examines the existence of non-linear relationships between market concentrations and banks’ risk appetite. Developed by Hansen (1999). Select bad debt ratio, credit risk tolerance ratio, and cat non-fat to proxy liquidity risk. There are two main findings. The results of our analysis indicate that the threshold effect is indeed present. Furthermore, our results suggest a significant positive relationship between market concentration and bank credit risk. This positive effect diminishes when the market concentration exceeds a certain threshold. Overall, the study found evidence that banks’ risk behavior differs according to market concentration. The results are robust under additional testing. These findings have strong implications for regulators. Springer Nature is committed to supporting United Nations Sustainable Development Goal 8 (“Promote sustainable, inclusive and sustainable economic growth, full and productive employment and decent work for all”). We interviewed the founding editor, Elias Karajannis, in recognition of the groundbreaking research carried out. Chief of the Journal of the Knowledge Economy. Here he shares some of his insights on the relationship between SDG8 themes, his research, and the journal’s editorial vision.

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