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On the optimality of bank competition policy

Ioannis G. Samantas ()
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Ioannis G. Samantas: University of Athens

No 209, Working Papers from Bank of Greece

Abstract: This study examines whether the effect of market structure on financial stability is persistent, subject to current regulation and supervision policies. Extreme Bounds Analysis (EBA) is employed over a sample of 2450 banks operating within the EU-27 during the period 2003-2010. The results show an inverse U-shaped association between market power and soundness and a stabilizing tendency in markets of less concentration, where policies lean towards limited restrictions on non-interest income, official intervention in bank management and book transparency. Regulation significantly contributes as a stability channel through which bank competition policy is optimally designed.

Keywords: Market power; financial stability; regulation; extreme bound analysis (search for similar items in EconPapers)
JEL-codes: D21 D4 L11 L51 (search for similar items in EconPapers)
Pages: 37
Date: 2016-07
New Economics Papers: this item is included in nep-ban, nep-cba, nep-com, nep-ind and nep-mon
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