How Does Bank Competition Affect Systemic Stability
By D. Anginer, Asli Demirgüç-Kunt, Minchen Zhu. 2012
505 citations recorded by the source corpus.
Using bank level measures of competition and co-dependence, the authors show a robust positive relationship between bank competition and systemic stability. Whereas much of the extant literature has focused on the relationship between competition and the absolute level of risk of individual banks, in this paper we examine the correlation in the risk taking behavior of banks, hence systemic risk. The analysis finds that greater competition encourages banks to take on more diversified risks, making the banking system less fragile to shocks. Examining the impact of the institutional and regulatory environment on systemic stability shows that banking systems are more fragile in countries with weak supervision and private monitoring, high government ownership of banks, and in countries with public policies that restrict competition. Furthermore, lack of competition has a greater adverse effect on systemic stability in countries with generous safety nets and weak supervision.
Subfields: Accounting, Finance
View Paper: https://www.semanticscholar.org/paper/7d3184b4733913e0969bda7f542c85e38cc90371
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Citations in the corpus
- The effect of capital ratios on the risk, efficiency and profitability of banks: Evidence from OECD countries (2017, unknown): “(2013), Berger and Bowman (2013), and Anginer et al. (2014) and use the following baseline OLS regression model:”
- Bank competition and financial stability in Asia Pacific (2014, unknown): “See, for example, De Nicol’o (2003), Beck et al. (2006a), Boyd et al. (2006), Evrensel (2008), Berger et al. (2009), Schaeck et al. (2009), Behr et al. (2010), Turk Ariss (2010), and Anginer et al. (2012).”
- What are the driving forces of bank competition across different income groups of countries (2014, methodology): “Following prior studies (e.g. Anginer et al., 2014, among others), we choose one output: total assets (Q), and three input prices: cost of deposits (w1) computed by dividing financial costs (interest paid) by their corresponding liabilities, cost of labour (w2) calculated by dividing personnel…”
- How Does Deposit Insurance Affect Bank Risk? Evidence from the Recent Crisis (2012, unknown): “These numbers are comparable to those in previous studies such as Anginer, Demirguc-Kunt, and Zhu (2012).”