| Abstract [eng] |
The banking sector is undergoing structural changes on both the international and the national level. Branches of foreign banking institutions keep appearing in the local banking sector, and some banks undergo consolidation. This contributes to the rapid changes in concentration of the banking sector. The concentration processes occurring within the banking sector bring about heated discussions among scientists regarding the impact of this concentration on the financial stability. Yet, there is still no unambiguous answer as to what extent financial stability is influenced by concentration of banks. Having identified the present research question, a case study is Lithuania was carried out. The goal of the study is to assess the impact of concentration of bank on the financial stability of the banking sector. To reach the set goal, the first part of the paper defines the concept of concentration in the banking industry, reviews the theoretical aspects of financial stability and presents a theoretical analysis of correlations between bank concentration and financial stability in the banking sector. The second part of the paper introduces the research methods, i.e.: the hypotheses are formulated and substantiated, peculiarities of calculating the indicators are explained, the main methods employed in the research are described and the logical consistency of the research is depicted. The third part is devoted to the research encompassing the time period from 2006 to 2014. The research focuses on the changes in the concentration of Lithuanian banks, the development of the financial stability in the banking sector and the impact of bank concentration on the financial stability of the banking sector. Having applied the regression analysis method, it was determined that the concentration ratios significantly influenced the indicators of financial stability in the banking sector, i.e. the increase of the concentration of Lithuanian banks had a positive impact on the financial stability of the banking sector. Such research results confirm the opinion of the supporters of the “concentration-stability” view. |
