Publication:
Bank Competition and Financial Stability

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dc.contributor.authorBerger, Allen N.
dc.contributor.authorKlapper, Leora F.
dc.contributor.authorTurk-Ariss, Rima
dc.date.accessioned2012-05-31T20:13:48Z
dc.date.available2012-05-31T20:13:48Z
dc.date.issued2008-08
dc.description.abstractUnder the traditional "competition-fragility" view, more bank competition erodes market power, decreases profit margins, and results in reduced franchise value that encourages bank risk taking. Under the alternative "competition-stability" view, more market power in the loan market may result in greater bank risk as the higher interest rates charged to loan customers make it more difficult to repay loans and exacerbate moral hazard and adverse selection problems. But even if market power in the loan market results in riskier loan portfolios, the overall risks of banks need not increase if banks protect their franchise values by increasing their equity capital or engaging in other risk-mitigating techniques. The authors test these theories by regressing measures of loan risk, bank risk, and bank equity capital on several measures of market power, as well as indicators of the business environment, using data for 8,235 banks in 23 developed nations. The results suggest that - consistent with the traditional "competition-fragility" view - banks with a greater degree of market power also have less overall risk exposure. The data also provide some support for one element of the "competition-stability" view - that market power increases loan portfolio risk. The authors show that this risk may be offset in part by higher equity capital ratios.en
dc.identifierhttp://documents.worldbank.org/curated/en/2008/08/9781899/bank-competition-financial-stability
dc.identifier.doi10.1596/1813-9450-4696
dc.identifier.urihttps://hdl.handle.net/10986/6794
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper No. 4696
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCESS TO CREDIT
dc.subjectALLOCATION OF CREDIT
dc.subjectASSET ALLOCATION
dc.subjectASSET RATIOS
dc.subjectASSETS RATIO
dc.subjectBALANCE SHEET
dc.subjectBANK ASSETS
dc.subjectBANK BEHAVIOR
dc.subjectBANK CAPITALIZATION
dc.subjectBANK CHARGES
dc.subjectBANK COMPETITION
dc.subjectBANK CREDIT
dc.subjectBANK EQUITY
dc.subjectBANK FAILURES
dc.subjectBANK LOAN
dc.subjectBANK MARKET
dc.subjectBANK PROFITABILITY
dc.subjectBANK REGULATION
dc.subjectBANK RISK
dc.subjectBANK SIZE
dc.subjectBANKING INDUSTRY
dc.subjectBANKING INSTITUTIONS
dc.subjectBANKING MARKET
dc.subjectBANKING MARKETS
dc.subjectBANKING PRODUCTS
dc.subjectBANKING SECTOR
dc.subjectBANKING SYSTEM
dc.subjectBANKING SYSTEMS
dc.subjectBANKRUPTCY
dc.subjectBANKRUPTCY LAWS
dc.subjectBANKRUPTCY RISK
dc.subjectBANKS
dc.subjectBARRIERS TO ENTRY
dc.subjectBONDS
dc.subjectBUSINESS LOANS
dc.subjectBUSINESS SCHOOL
dc.subjectCAPITAL BASE
dc.subjectCAPITAL REQUIREMENTS
dc.subjectCAPITALIZATION
dc.subjectCHECKS
dc.subjectCOLLATERAL
dc.subjectCOMMERCIAL LOAN
dc.subjectCOMMERCIAL LOAN MARKET
dc.subjectCOMPETITIVENESS
dc.subjectCREDIT ANALYSIS
dc.subjectCREDIT AVAILABILITY
dc.subjectCREDIT DERIVATIVES
dc.subjectCREDIT INFORMATION
dc.subjectCREDIT MARKET
dc.subjectCREDITS
dc.subjectDEPOSIT
dc.subjectDEPOSIT INSURANCE
dc.subjectDEPOSITS
dc.subjectDOMESTIC BANKS
dc.subjectDUMMY VARIABLE
dc.subjectECONOMIC DEVELOPMENT
dc.subjectECONOMIC POLICY
dc.subjectEQUITY CAPITAL
dc.subjectEXCHANGE RATES
dc.subjectFEDERAL RESERVE
dc.subjectFEDERAL RESERVE BANK
dc.subjectFEDERAL RESERVE BANK OF NEW YORK
dc.subjectFINANCIAL CRISES
dc.subjectFINANCIAL DATA
dc.subjectFINANCIAL FRAGILITY
dc.subjectFINANCIAL INSTABILITY
dc.subjectFINANCIAL INSTITUTIONS
dc.subjectFINANCIAL LIBERALIZATION
dc.subjectFINANCIAL MARKETS
dc.subjectFINANCIAL POLICY
dc.subjectFINANCIAL STABILITY
dc.subjectFINANCIAL SYSTEM
dc.subjectFIXED CAPITAL
dc.subjectFOREIGN BANK
dc.subjectFOREIGN BANKS
dc.subjectGAMBLING
dc.subjectGOVERNMENT BANKS
dc.subjectHOLDING
dc.subjectINCOME
dc.subjectINFORMAL ECONOMY
dc.subjectINPUT PRICES
dc.subjectINSURANCE
dc.subjectINTANGIBLE
dc.subjectINTEREST RATE
dc.subjectINTEREST RATE RISK
dc.subjectINTEREST RATES
dc.subjectINTERNATIONAL BANK
dc.subjectINVESTOR PROTECTION
dc.subjectLARGE BANKS
dc.subjectLEGAL RIGHTS
dc.subjectLEGAL SYSTEMS
dc.subjectLOAN
dc.subjectLOAN APPLICANTS
dc.subjectLOAN CONTRACT
dc.subjectLOAN CUSTOMERS
dc.subjectLOAN MARKET
dc.subjectLOAN MARKETS
dc.subjectLOAN PORTFOLIO
dc.subjectLOAN PORTFOLIO QUALITY
dc.subjectLOAN PORTFOLIOS
dc.subjectLOAN RATES
dc.subjectMARKET COMPETITION
dc.subjectMARKET CONCENTRATION
dc.subjectMARKET POWER
dc.subjectMARKET STRUCTURE
dc.subjectMARKET VALUE
dc.subjectMONETARY FUND
dc.subjectMONOPOLY
dc.subjectMORAL HAZARD
dc.subjectMULTINATIONALS
dc.subjectNONPERFORMING LOANS
dc.subjectOPPORTUNITY COSTS
dc.subjectPERSONNEL EXPENSES
dc.subjectPORTFOLIO RISK
dc.subjectPRIVATE CREDIT
dc.subjectPROBABILITY
dc.subjectPROBABILITY OF DEFAULT
dc.subjectPROFIT MARGINS
dc.subjectPROFITABILITY
dc.subjectPRUDENTIAL REGULATION
dc.subjectPUBLIC ECONOMICS
dc.subjectPUBLIC REGISTRY
dc.subjectREAL ESTATE
dc.subjectRENTS
dc.subjectRETAIL
dc.subjectRETAINED EARNINGS
dc.subjectRETURN
dc.subjectRETURN ON ASSETS
dc.subjectRETURNS
dc.subjectRISK EXPOSURE
dc.subjectRISK EXPOSURES
dc.subjectRISK MANAGEMENT
dc.subjectRISK OF BANK FAILURE
dc.subjectRISK TAKING
dc.subjectSAFETY NET
dc.subjectSALES
dc.subjectSALES OF LOANS
dc.subjectSAVINGS
dc.subjectSECURITIES
dc.subjectSMALL BUSINESS
dc.subjectSMALL BUSINESS LOANS
dc.subjectSUBSIDIARIES
dc.subjectTAX
dc.subjectVOLATILITY
dc.titleBank Competition and Financial Stabilityen
dspace.entity.typePublication
okr.crossref.titleBank Competition And Financial Stability
okr.date.doiregistration2025-04-10T12:25:48.825069Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2008/08/9781899/bank-competition-financial-stability
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeFinance and Markets
okr.globalpracticeFinance and Markets
okr.guid121111468339560931
okr.identifier.doi10.1596/1813-9450-4696
okr.identifier.externaldocumentum000158349_20080820103955
okr.identifier.internaldocumentum9781899
okr.identifier.reportWPS4696
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2008/08/20/000158349_20080820103955/Rendered/PDF/WPS4696.pdfen
okr.sectorFinance :: General finance sector
okr.themeFinancial and private sector development :: Other financial and private sector development
okr.topicFinance and Financial Sector Development::Access to Finance
okr.topicBanks and Banking Reform
okr.topicMacroeconomics and Economic Growth::Markets and Market Access
okr.topicFinance and Financial Sector Development::Debt Markets
okr.unitDevelopment Research Group (DECRG)
okr.volume1 of 1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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