Bank Competition and Financial Stability : Friends or Foes?

By Thorsten Beck. 2008

246 citations recorded by the source corpus.

Theory makes ambiguous predictions about the relationship between market structure and competitiveness of the banking system and banking sector stability. Empirical studies focusing on individual countries provide similarly ambiguous results, while cross-country studies point mostly to a positive relationship between competition and stability in the banking system. Where liberalization and unfettered competition have resulted in fragility, this has been mostly the consequence of regulatory and supervisory failures. The advantages of competition for an efficient and inclusive financial system are strong, and regulatory and supervisory policies should focus on an incentive-compatible environment for banking rather than try to fine-tune market structure or the degree of competition.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/af17cf0a4067a2aaa84618fed68fd0ae73c67d5d

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Citations in the corpus

Bank Competition and Stability: Cross-country Heterogeneity (2013, background): “The cross-country literature has found that more concentrated banking systems are less likely to suffer a systemic banking crisis as are more competitive banking systems (Beck, DemirgucKunt, and Levine (2006); Schaeck, Cihak, and Wolfe (2009)). There seems also evidence that banks in more competitiv”
Banking Sector Stability, Efficiency, and Outreach in Kenya (2010, background): “See Beck (2008) for an overview of the recent empirical literature.”
Ultimate ownership and bank competition (2016, background): “…and Kahn, Pennacchi, and Sopranzetti (2005), Célérier and Matray (2014), and others (reviewed below), (6) Beck, Demirgüç-Kunt, and Levine (2006), Beck (2008), Berger, Klapper, and Turk-Ariss (2009), Martinez-Miera and Repullo (2010), Hakenes and Schnabel (2011), Anginer, Demirgüç-Kunt and Zhu…”
How Does Capital Affect Bank Performance During Financial Crises (2013, background): “The empirical literature also finds that competition affects banks’ market shares, their ability to survive and the stability of the banking sector (e.g., Beck, Demirguc-Kunt, and Levine, 2006; Beck, 2008).”
Bank Competition, Risk and Asset Allocations (2009, background): “EVIDENCE In a recent survey of the empirical literature, Beck (2008) points out that studies of banks in individual countries have reached mixed conclusions on the relationship between competition and risk in banking, while cross-country studies tend to indicate a positive relationship between…”
Bank Competition and Financial Stability: Much Ado About Nothing? (2015, unknown): “This systematic measurement issue could be due to the fact that the H-statistic imposes restrictive assumptions on a bank’s cost function that are only valid when the market in question is in equilibrium (Beck, 2008).”
Do Banks Benefit from Internationalization? Revisiting the Market Power-Risk Nexus (2013, unknown): “Previous l terature has used a bank’s z-score, nonperforming loans, or the volatility of bank-level variables such as reserves, profits, or nonperforming loans (Beck 2008, Behr et al. 2007, Corvoisier and Gropp 2002, De Guevara and Maudos 2007b).”
The impact of banking regulations on banks' cost and profit efficiency: Cross-country evidence (2009, background): “Similarly, other studies have examined the effect of regulations on banking sector crisis (Demirguc-Kunt and Detragiache, 2002; Beck et al., 2006a) and banks’ risk taking behaviour (Gonzalez, 2005; Laeven and Levine, 2006). An issue that has received comparatively little attention, however, is what ”
Bank competition and financial stability in Asia Pacific (2014, methodology): “The probability of bankruptcy, computed using the Black and Scholes (1973) and Merton (1974) contingent claims 4 Beck (2008) provides an excellent survey of the literature on bank competition and financial stability.”
Regulations, competition and bank risk-taking in transition countries (2008, background): “As discussed in Beck (2008), the activity and branching restrictions that were enforced after the financial crises of the 1930s aimed to restrict competition and enhance stability.”