Competition and stability in banking

Marcel Canoy, Machiel van Dijk, Jan Lemmen, Ruud de Mooij and Jürgen Weigand

No 15, CPB Document from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: More competition among banks typically enhances the welfare of consumers. However, it may also involve a threat to financial stability, that is of vital importance for the functioning of economies. Read also the accompanying press release.This study reveals that many forms of competition do not endanger financial stability, however. For instance, intensified competition among incumbent banks usually has little impact on financial stability. Moreover, in cases where competition does affect financial stability, the latter might best be safeguarded by sound prudential regulation or good corporate governance.

JEL-codes: G21 G28 G32 G38 (search for similar items in EconPapers)
Date: 2001-12
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Citations: View citations in EconPapers (41)

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