Competition in the Financial Sector: Overview of Competition Policies

By Stijn Claessens. Social Science Research Network, 2009

253 citations recorded by the source corpus.

Competition in the financial sector, as in other sectors, matters for allocative, productive, and dynamic efficiency. Theory suggests, however, that unfettered competition is not necessarily best given the special features of financial services. The author discusses these analytical complications before reviewing how to assess competition in the financial sector and its determinants. It is shown that competitiveness varies greatly across countries, in perhaps surprising ways, and that it is not driven by financial system concentration. Rather, systems with greater foreign entry and fewer entry and activity restrictions tend to be more competitive, confirming that contestability—the lack of barriers to entry and exit—determines effective competition. The author then analyzes how competition policy in the financial sector has generally been conducted and how changes in competition in the financial services industries should affect competition policy going forward. In part based on comparison with other indu...

Subfields: Finance

View Paper: https://www.semanticscholar.org/paper/a99ad42dabfdc435f102a0779a1a4eebd44f30eb

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1. T. Moore
2. M. Olivero
3. A. Mirzaei
4. Ji (George) Wu
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Citations in the corpus

• What are the driving forces of bank competition across different income groups of countries (2014, background): “As in other industries, the degree of competition in the financial sector matters for the efficiency of production of financial services, the quality of financial products and the degree of innovation in the sector (Claessens, 2009).”
• Competition in banking and the lending channel: Evidence from bank-level data in Asia and Latin America (2011, unknown): “6 For post-crisis reform measures towards enhancing competition in the banking sector, see Claessens and Laeven (2004) and Claessens (2009) for a global overview, Yildirim and Philippatos (2007) for Latin American countries, Bagliano et al. (2000), De Jonghe and Vander Vennet (2008), and Brissimis…”
• Do foreign banks increase competition? Evidence from emerging Asian and Latin American banking markets (2011, background): “The proponents in favor of foreign bank entry argue that it enhances competition in domestic banking markets, improves the efficiency of domestic bank operations, provides financial services at lower costs, and promotes economic growth by boosting the efficiency of resource allocation (Claessens et ”
• The profitability of banks in Japan (2010, unknown): “The increased harmonization will help to contribute to enhanced competition environment and avoid regulatory arbitrage (Claessens, 2009).”
• Competition and bank stability (2017, unknown): “Empirical research regarding the link between competition and stability provides mixed results (Claessens, 2009).”