Contemporary Trends and Challenges in Finance by Krzysztof Jajuga Hermann Locarek-Junge & Lucjan T. Orlowski

Author:Krzysztof Jajuga, Hermann Locarek-Junge & Lucjan T. Orlowski
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

Conclusions

The aim of the paper was to verify the impact of competitiveness of the banking sector and concentration on banks’ credit ratings. The following hypothesis has been put: The bigger banks from the countries where the banking sector is more concentrated and more competitive, the higher banks’ credit ratings are; this has been verified positively.

Financial indicators have been taken into consideration for the analysis. The received findings suggest that banks’ notes are especially sensitive to the capital adequacy, the assets quality and the earnings factors. These results confirm previous research. Bigger banks receive higher notes. The mentioned relationship rises with the market share of the agencies. The impact of countries’ notes is higher in the case of the ratings given by bigger CRAs. An opposite relationship has been noticed for the GDP growth.

The concentration of the banking sector has got a significant impact on the notes proposed by Fitch and Moody’s, but the direction of the impact has been varied. Fitch notes are positively correlated with concentration indicators. As a result, this CRA presents an opinion that bigger banks on more concentrated markets can receive the financial support from the government, because in the case of default problems will have an influence on the whole financial system. Moody’s puts attention to insolvency problems of the financial market, and as a result its notes are negatively correlated with the concentration of the banking sector.

The competition in the banking sector has got a significant impact on the described notes. Fitch ratings react negatively to a higher competition on the financial market. An opposite relationship has been observed in the case of Moody’s and S&P’s. The received results can be useful for supervisors, investors and entities that would like to receive ratings.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.