Bank competition and stability: Cross-country heterogeneity

Thorsten Beck, Olivier De Jonghe and Glenn Schepens

Journal of Financial Intermediation, 2013, vol. 22, issue 2, 218-244

Abstract: This paper documents large cross-country variation in the relationship between bank competition and bank stability and explores market, regulatory and institutional features that can explain this variation. We show that an increase in competition will have a larger impact on banks’ fragility in countries with stricter activity restrictions, lower systemic fragility, better developed stock exchanges, more generous deposit insurance and more effective systems of credit information sharing. The effects are economically large and thus have important repercussions for the current regulatory reform debate.

Keywords: Bank competition; Financial stability; Herding; Deposit insurance; Information sharing; Risk shifting (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (504)

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Working Paper: Bank competition and stability: cross-country heterogeneity (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:22:y:2013:i:2:p:218-244

DOI: 10.1016/j.jfi.2012.07.001

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