The analysis of the relationship between bank competition and financial stability remains a controversial issue and widely discussed in the academic and political community. Using a sample of 117 listed banks in 16 European countries for the years 2011 to 2018, the article explores the impact of market power, measured by the Lerner index, on the bank stability, measured by distance-to-default and Z score. Our results show that for the overall sample, higher market power in banking decreases the risky behavior of banks, confirming the “competition-fragility” view. We do not find any support for a U-shaped relationship between competition and bank risk-taking. However, our findings differ from previous studies pointing out that the relationship between bank competition and risk-taking is differentiated depending on whether the bank is based in a country with a more stable banking system or a less stable one. In countries with a less financially stable banking system, increased competition leads to increased bank risk-taking. In countries with a more stable banking system, market power seems not to influence banks’ financial stability. Public policies must guarantee banking competition but limiting excessive bank risk-taking, especially in countries with less financially sound banking systems. The consolidation of European banking can be a key element for achieving these policies.

This paper analyses the impact of corporate social performance (CSP) on bank efficiency in a sample of 108 European listed banks across 21 countries over the period 2011–2019. Simar and Wilson’s two-stage approach (Simar and Wilson in J Econom 136:31–64, 2007) has been applied, specifically using data envelopment analysis (DEA) at the first stage to estimate efficiency scores and then truncated regression estimation with double-bootstrap to test the significance of the relationship between bank efficiency and CSP as well as its different dimensions. Our results suggest evidence of a U-shaped relationship between CSP and efficiency, indicating that banks with either high or low corporate social performance levels are the most efficient. Considering the isolated effect of environmental, social, and governance dimensions, the same conclusion can be drawn for the latter two, while the former does not appear to have any effect on a bank’s efficiency. Our work contributes to the existing literature by providing a holistic procedure for assessing CSP in terms of efficiency, allowing us to study the separate effect of each component on bank efficiency. Our results have strong implications for regulators, policymakers, bank managers and investors supporting the changes in the EU Regulatory Taxonomy that lead banks to align their activities and strategies with the Sustainable Development Goals.

Sheltered workshops (SW), as social enterprises, need to be efficient and maintain a balance between social aspects and economic prosperity. An important part of research on the subject has been focused on measuring the economic value created by these entities. In this study, we analyzed performance of SWs in Galicia (Spain), from the point of view of efficiency, combining social and economic aspects and investigating its key determinants. Using panel data from 609 entities from 2008 to 2017, we followed Simar and Wilson’s two-stage approach (2007). Specifically, we used data envelopment analysis (DEA) at the first stage to estimate efficiency scores and then used truncated regression estimation with double-bootstrap to test the significance of explanatory variables. Our results show that SWs have high levels of performance, higher in economic than in social terms, and we found that several factors, such as size and age, positively influence total, economic and social efficiency individually. We also found a positive, significant relationship between social efficiency and economic profitability.