Market concentration, risk-taking, and bank performance: Evidence from emerging economies

Jianhua Zhang, Chunxia Jiang* (Corresponding Author), Baozhi Qu, Peng Wang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

65 Citations (Scopus)


This paper investigates the relationship between market concentration, risk-taking, and bank performance using a unique dataset of the BRIC banks over the period 2003-2010. We find a negative association between market concentration and performance, in support of the "quiet life" hypothesis. We also find that banks taking a lower level of risks perform better, in favor of prudential practice. Moreover, the BRICs' banking sectors were all negatively affected by the 2007-2008 global financial crisis with China and Russia being the least and most affected, respectively. On average Chinese and Brazilian banks outperform Indian and Russian ones, indicating that China and Brazil have more favorable institutional infrastructure. These results are robust to alternative model specifications and estimation techniques. Our analysis may have important policy implications for bankers and regulators in the BRICs and other developing and transition countries. © 2013 Elsevier Inc.
Original languageEnglish
Pages (from-to)149-157
Number of pages9
JournalInternational Review of Financial Analysis
Early online date23 Aug 2013
Publication statusPublished - Dec 2013

Bibliographical note

Peng Wang acknowledges the financial support from the National Natural Science Foundation of China (Grant No. 71303255).


  • Bank performance
  • Brazil
  • China
  • India
  • Market concentration
  • Risk-taking
  • Russia
  • Stochastic frontier analysis


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