Competition in the Financial Sector: Overview of Competition Policies

Stijn Claessens ()

No 2009/045, IMF Working Papers from International Monetary Fund

Abstract: As in other sectors, competition in finance matters for allocative, productive and dynamic efficiency. Theory suggests, however, that unfettered competition is not first best given the special features of finance. I review these analytics and describe how to assess the degree of competition in markets for financial services. Existing research shows that the degree of competition greatly varies across markets, largely driven by barriers to entry and exit. I argue that changes in financial services industries require updated competition policies and institutional arrangements, but that practices still fall short. Furthermore, I show that developing countries face some specific competition challenges.

Keywords: WP; competition policy; policy issues arise; degree of competition; market structure; competition authority; financial services; competition; contestability; stability; foreign banks; emerging markets; monopolistic competition; cost of capital; financial services industry; policy point of view; measurement issue; market power; Financial sector; Commercial banks; Global (search for similar items in EconPapers)
Pages: 20
Date: 2009-03-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (80)

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Journal Article: Competition in the Financial Sector: Overview of Competition Policies (2009)
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