Macroprudential policies and bank competition: International bank-level evidence

Francisco González

Journal of Financial Stability, 2022, vol. 58, issue C

Abstract: The paper analyzes the effect of changes in eight types of bank-oriented macroprudential policies on bank competition and stability. Using a bank-level database of a maximum of 2511 listed banks from 52 countries, I find that a tightening in bank-oriented macroprudential policies on average increases both bank competition and stability. However, there are differences across policies and countries. Loan supply and liquidity-based policies increase bank competition whereas capital and tax-based policies reduce bank competition. Tighter legal restrictions on entry and activity in a country reduce the positive (increase the negative) effect of macroprudential policies on bank competition. In terms of policy implications, I identify a sub-set of especially useful macroprudential policies that increase not only financial stability but also bank competition.

Keywords: Banks; Competition; Macroprudential; Regulation; Risk (search for similar items in EconPapers)
JEL-codes: G01 G31 G32 O40 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:58:y:2022:i:c:s157230892100125x

DOI: 10.1016/j.jfs.2021.100967

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