Financial deregulation after financial repression during 1980s and 1990s has stimulated a fierce competition among banks across the world. In pace with this, banking industry of Bangladesh is also experiencing an intense competition, since it is composed of a large number of banks. Considering this upsurge, our study aims to explore the impact of competition and efficiency on financial stability of Bangladeshi banks over 2009–2017. For exploring this nexus, we calculate Boone indicator and Z-score, construct banking efficiency index by principal component analysis, using bank-level data to measure competition, stability and efficiency, respectively, and analyze the impact of efficiency on financial stability at different levels of competition. We address the endogeneity of the estimation by employing two-step system GMM and different robustness checks. The findings of our study suggest a nonlinear competition–stability relationship, and though efficiency contributes to stability, the impact is moderated in the presence of competition. Our findings are robust to alternative measures of competition, stability and control variables, which could be useful for policy makers to formulate strategies and policies to maintain financial stability.

1980年代和1990年代的金融镇压之后，金融管制放松，刺激了全球各银行之间的激烈竞争。与此同时，孟加拉国的银行业由众多银行组成，因此也正经历着激烈的竞争。考虑到这一热潮，我们的研究旨在探讨竞争和效率对孟加拉国银行在2009–2017年间金融稳定的影响。为了探索这个联系，我们计算Boone指标和Z得分，通过主成分分析构建银行效率指数，使用银行级别的数据分别衡量竞争，稳定性和效率，并分析效率对不同竞争水平下金融稳定性的影响。我们通过采用两步系统GMM和不同的鲁棒性检查来解决估计的内生性。我们的研究结果表明，竞争与稳定之间存在非线性关系，尽管效率有助于稳定，但在竞争存在的情况下影响是缓和的。我们的研究结果对于竞争，稳定性和控制变量的替代性测度是有力的，这对于决策者制定战略和政策以维持金融稳定可能是有用的。