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Hypothesis Identification and Peer-Reviewed Empirical Article

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Hypothesis Identification and Peer-Reviewed Empirical Article (The Concentration-Stability Relationship in the Banking System)

In today's economy, there are many predictions causing a debate on the association between the banking system's concentration and stability. In this case, researchers think that a banking organization that's less concentrated is more likely to experience a financial crisis while others debate that a banking structure with a more concentrated develops banking system fragility. The reviewed empirical article chosen for critique is an article based on the concentration-stability relationship in the banking system. The main purpose of the article is to examine the actuality of the concentration-stability relationship in banking industry as well as observing the ties between a banking system's frequency, cost in a crises and banking concentration.

To explain the research, the authors organized the article into sections which made it easier to read and follow. The sections included were an introduction, reviewed literature, research methodology, empirical results and a conclusion. The introduction explains the concerns of how systemic risk in financial industries around the world has increased, which then provides an explanation on why the research was conducted (DeltuvaitÄ—, 2010). The introduction to the article also includes a brief description of each hypothesis to allow the reader to have a clear understanding of what is being measured in order to determine the outcome. The reviewed literature explains the research, facts and opinions of the hypothesis from other scientists as well as researchers (Cooper & Schindler2006). Authors in the article also explain in this section the importance of the studied research by giving relevant research displaying opinions of other authors and actual data from large and small banks concentration levels. This is the section of the article that provides the evidence of the argument in question and allows a clear path of the reader to what led up to the statistical research. The empirical and methodology results section of the article begins analyzing the concentration-stability relationship in banking as well as the relationship between banking system concentration, frequency, and cost of crises the banks around the world.

Evaluating the Hypothesis

The main questions posed in the article to the researcher regarding how collecting supportive data were to determine if; a banking system with high concentration level are more stable than others, are crises less frequent in countries with a more concentrated bank systems, or is fiscal costs sustained in the banking crises and broader welfare losses are less in countries with a high concentrated banking system. The researcher in the article's directional path was to argue that the banking crises are less frequent as well as the fiscal



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