Deposit Market Competition, Wholesale Funding, and Bank Risk

B.R. Craig, V. Dinger

Research output: Working paperDiscussion paperOther research output

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Abstract

In this paper we revisit the long debate on the risk effects of bank competition and propose a new approach to the empirical estimation of the relation between deposit market competition and bank risk. Our approach accounts for the opportunity of banks to shift to wholesale funding when deposit market competition is intense. The analysis is based on a unique comprehensive dataset which combines retail deposit rates data with data on bank characteristics and with data on local deposit market features for a sample of 589 U.S. banks. Our results support the notion of a risk-enhancing effect of deposit market competition.
Original languageEnglish
Place of PublicationTilburg
PublisherFinance
Number of pages34
Volume2010-65S
Publication statusPublished - 2010

Publication series

NameCentER Discussion Paper
Volume2010-65S

Fingerprint

Deposits
Bank risk
Funding
Market competition
Retail
Bank competition
Deposit rate

Keywords

  • bank competition
  • wholesale funding
  • bank risk
  • deposit rates

Cite this

Craig, B. R., & Dinger, V. (2010). Deposit Market Competition, Wholesale Funding, and Bank Risk. (CentER Discussion Paper; Vol. 2010-65S). Tilburg: Finance.
Craig, B.R. ; Dinger, V. / Deposit Market Competition, Wholesale Funding, and Bank Risk. Tilburg : Finance, 2010. (CentER Discussion Paper).
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Craig, BR & Dinger, V 2010 'Deposit Market Competition, Wholesale Funding, and Bank Risk' CentER Discussion Paper, vol. 2010-65S, Finance, Tilburg.

Deposit Market Competition, Wholesale Funding, and Bank Risk. / Craig, B.R.; Dinger, V.

Tilburg : Finance, 2010. (CentER Discussion Paper; Vol. 2010-65S).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Deposit Market Competition, Wholesale Funding, and Bank Risk

AU - Craig, B.R.

AU - Dinger, V.

N1 - This is also EBC Discussion Paper 2010-17S Pagination: 34

PY - 2010

Y1 - 2010

N2 - In this paper we revisit the long debate on the risk effects of bank competition and propose a new approach to the empirical estimation of the relation between deposit market competition and bank risk. Our approach accounts for the opportunity of banks to shift to wholesale funding when deposit market competition is intense. The analysis is based on a unique comprehensive dataset which combines retail deposit rates data with data on bank characteristics and with data on local deposit market features for a sample of 589 U.S. banks. Our results support the notion of a risk-enhancing effect of deposit market competition.

AB - In this paper we revisit the long debate on the risk effects of bank competition and propose a new approach to the empirical estimation of the relation between deposit market competition and bank risk. Our approach accounts for the opportunity of banks to shift to wholesale funding when deposit market competition is intense. The analysis is based on a unique comprehensive dataset which combines retail deposit rates data with data on bank characteristics and with data on local deposit market features for a sample of 589 U.S. banks. Our results support the notion of a risk-enhancing effect of deposit market competition.

KW - bank competition

KW - wholesale funding

KW - bank risk

KW - deposit rates

M3 - Discussion paper

VL - 2010-65S

T3 - CentER Discussion Paper

BT - Deposit Market Competition, Wholesale Funding, and Bank Risk

PB - Finance

CY - Tilburg

ER -

Craig BR, Dinger V. Deposit Market Competition, Wholesale Funding, and Bank Risk. Tilburg: Finance. 2010. (CentER Discussion Paper).