Bank Competition and Stability

Cross-country Heterogeneity (Replaced by EBC DP 2012-026)

T.H.L. Beck, O.G. De Jonghe, G. Schepens

Research output: Working paperDiscussion paperOther research output

Abstract

This paper documents a large cross-country variation in the relationship between bank competition and stability and explores market, regulatory and institutional features that can explain this heterogeneity. Combining insights from the competition-stability and regulation-stability literatures, we develop a unified framework to assess how regulation, supervision and other institutional factors may make it more likely that the data favor the charter-value paradigm or the risk-shifting paradigm. We show that an increase in competition will have a larger impact on banks’ risk taking incentives in countries with stricter activity restrictions, more homogenous market structures, more generous deposit insurance and more effective systems of credit information sharing.
Original languageEnglish
Place of PublicationTilburg
PublisherEBC
Volume2011-019
Publication statusPublished - 2011

Publication series

NameEBC Discussion Paper
Volume2011-019

Fingerprint

Paradigm
Bank competition
Bank stability
Regulation and supervision
Information sharing
Incentives
Deposit insurance
Risk-shifting
Market structure
Charter value
Bank risk taking
Institutional factors
Credit

Keywords

  • Competition
  • Stability
  • Banking
  • Herding
  • Deposit Insurance
  • Information Sharing
  • Risk Shifting

Cite this

Beck, T. H. L., De Jonghe, O. G., & Schepens, G. (2011). Bank Competition and Stability: Cross-country Heterogeneity (Replaced by EBC DP 2012-026). (EBC Discussion Paper; Vol. 2011-019). Tilburg: EBC.
Beck, T.H.L. ; De Jonghe, O.G. ; Schepens, G. / Bank Competition and Stability : Cross-country Heterogeneity (Replaced by EBC DP 2012-026). Tilburg : EBC, 2011. (EBC Discussion Paper).
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abstract = "This paper documents a large cross-country variation in the relationship between bank competition and stability and explores market, regulatory and institutional features that can explain this heterogeneity. Combining insights from the competition-stability and regulation-stability literatures, we develop a unified framework to assess how regulation, supervision and other institutional factors may make it more likely that the data favor the charter-value paradigm or the risk-shifting paradigm. We show that an increase in competition will have a larger impact on banks’ risk taking incentives in countries with stricter activity restrictions, more homogenous market structures, more generous deposit insurance and more effective systems of credit information sharing.",
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Beck, THL, De Jonghe, OG & Schepens, G 2011 'Bank Competition and Stability: Cross-country Heterogeneity (Replaced by EBC DP 2012-026)' EBC Discussion Paper, vol. 2011-019, EBC, Tilburg.

Bank Competition and Stability : Cross-country Heterogeneity (Replaced by EBC DP 2012-026). / Beck, T.H.L.; De Jonghe, O.G.; Schepens, G.

Tilburg : EBC, 2011. (EBC Discussion Paper; Vol. 2011-019).

Research output: Working paperDiscussion paperOther research output

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KW - Stability

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KW - Herding

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