Concentration of the banking system

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Author: Chief Assist. Prof. Dr. Ivaylo Michailov (Bourgas Prof. Assen Zlatarov University)

Keywords: concentration of the banking system, fragmentation, foreign banks, credit sustainability.

This article examines the advantages and the shortcomings of the concentration (fragmentation) of the banking system and the role of the foreign banks in this process. Some theoretical arguments and empirical data are tracked out to substantiate the hypothesis established in the recent years that concentration improves the stability of the system and credit sustainability. Finally the article presents a comparison between the degrees of concentration of the banking systems in Bulgaria and in the other member countries of the European Union in the period 2001 - 2005.