Capital regulation, bank competition, and financial stability

Hendrik Hakenes and Isabel Schnabel

Economics Letters, 2011, vol. 113, issue 3, 256-258

Abstract: We analyze capital requirements if banks compete for loans and deposits. Banks and firms are subject to a risk-shifting problem. The ambiguous effect of competition on banks’ risk-taking translates into an ambiguous effect of capital requirements on financial stability.

Keywords: Bank competition; Capital regulation; Risk-shifting; Banking stability (search for similar items in EconPapers)
JEL-codes: D43 G21 G28 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (57)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:113:y:2011:i:3:p:256-258

DOI: 10.1016/j.econlet.2011.07.008

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