Bank Competition and Financial Stability : Friends or Foes?

Theory makes ambiguous predictions about the relationship between market structure and competitiveness of the banking system and banking sector stability. Empirical studies focusing on individual countries provide similarly ambiguous results, whil...

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Bibliographic Details
Main Author: Beck, Thorsten
Format: Policy Research Working Paper
Language:English
Published: World Bank, Washington, DC 2012
Subjects:
Online Access:http://documents.worldbank.org/curated/en/2008/06/9605096/bank-competition-financial-stability-friends-or-foes
http://hdl.handle.net/10986/6863
id okr-10986-6863
recordtype oai_dc
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic ACCESS TO CREDIT
ACCESS TO FINANCE
ARBITRAGE
BALANCE SHEET
BANK ACQUISITIONS
BANK ACTIVITY
BANK ASSET
BANK CAPITALIZATION
BANK COMPETITION
BANK CONSOLIDATION
BANK FAILURE
BANK FAILURE RESOLUTION
BANK FAILURES
BANK FOR INTERNATIONAL SETTLEMENTS
BANK HOLDING COMPANIES
BANK LOANS
BANK MERGERS
BANK OF ENGLAND
BANK REGULATION
BANK RISK
BANK SUPERVISORS
BANKING CRISES
BANKING CRISIS
BANKING DISTRESS
BANKING INDUSTRY
BANKING REGULATION
BANKING RELATIONSHIPS
BANKING SECTOR
BANKING STABILITY
BANKING STRUCTURE
BANKING SYSTEM
BANKING SYSTEMS
BANKRUPTCY
BANKS
BARRIER
BARRIER TO ENTRY
BARRIERS TO ENTRY
CAPITAL CONTROLS
CAPITAL MARKET
CAPITAL MARKETS
CAPITAL RATIOS
CAPITAL REGULATION
CAPITAL REQUIREMENT
CAPITAL REQUIREMENTS
CENTRAL BANK
COMMERCIAL BANKING
COMMERCIAL BANKS
COMPETITIVE MARKETS
CONSOLIDATED SUPERVISION
CONSOLIDATION
CREDIT DECISIONS
CREDIT INFORMATION
CREDIT MARKET
CREDIT RATIONING
CREDIT REGISTRIES
CREDIT REGISTRY
CREDIT REPORTING
CREDIT RISK
CREDITORS
CROSS-BORDER BANKING
DEPOSIT
DEPOSIT INSURANCE
DEPOSIT INSURANCE PREMIUMS
DEPOSIT INSURANCE SCHEMES
DEPOSIT INTEREST RATE
DEPOSIT INTEREST RATES
DEPOSITOR
DEPOSITORS
DEPOSITS
DEREGULATION
DEVELOPING COUNTRIES
DIVERSIFICATION
DIVERSIFICATION BENEFITS
DOMESTIC BANK
EARNINGS
ECONOMIC GROWTH
ECONOMIES OF SCALE
EMERGING ECONOMIES
EMERGING MARKET
EMERGING MARKET ECONOMIES
EMERGING MARKETS
ENTRY BARRIERS
EQUILIBRIUM CREDIT
EQUILIBRIUM CREDIT RATIONING
EXCHANGE RATE
EXCHANGE RATE REGIMES
EXCHANGE RATES
EXPOSURES
FEDERAL RESERVE
FEDERAL RESERVE BANK
FEDERAL RESERVE SYSTEM
FINANCIAL CONGLOMERATES
FINANCIAL CRISES
FINANCIAL DEEPENING
FINANCIAL DISTRESS
FINANCIAL FRAGILITY
FINANCIAL INNOVATION
FINANCIAL INSTABILITY
FINANCIAL INSTITUTIONS
FINANCIAL INTEGRATION
FINANCIAL INTERMEDIARY
FINANCIAL INTERMEDIATION
FINANCIAL LIBERALIZATION
FINANCIAL MARKETS
FINANCIAL POLICY
FINANCIAL PRODUCTS
FINANCIAL RISK
FINANCIAL SAFETY
FINANCIAL SAFETY NET
FINANCIAL SAFETY NETS
FINANCIAL SECTOR
FINANCIAL SECTOR STABILITY
FINANCIAL SERVICES
FINANCIAL STABILITY
FINANCIAL SYSTEM
FINANCIAL SYSTEMS
FOREIGN BANK
FOREIGN BANKS
FOREIGN ENTRY
GOVERNMENT OWNERSHIP
GOVERNMENT POLICY
GROWTH RATE
ILLIQUIDITY
INEQUALITY
INFLATION
INFLATION RATE
INFORMATION SHARING
INITIAL INVESTMENT
INPUT PRICES
INSTITUTIONAL ENVIRONMENT
INSURANCE
INSURANCE DESIGN
INSURERS
INTEREST RATE
INTEREST RATE CEILINGS
INTEREST RATES
INTERNATIONAL BANK
INTERNATIONAL BANKING
INTERNATIONAL BANKS
INTERNATIONAL CAPITAL
INTERNATIONAL CAPITAL MARKET
INTERNATIONAL FINANCE
INTERNATIONAL RESERVES
INTERSTATE BANKING
INVESTMENT BANKING
LENDER
LENDER OF LAST RESORT
LENDERS
LIBERAL ENTRY
LOAN
LOAN CONTRACTS
LOAN DEFAULT
LOAN GUARANTEES
LOAN LOSS PROVISIONS
MARGINAL COST
MARKET PARTICIPANTS
MARKET SHARE
MARKET SHARES
MARKET STRUCTURE
MARKET STRUCTURES
MICROFINANCE
MONETARY POLICY
MONOPOLY
MORAL HAZARD
MORTGAGE
MORTGAGE MARKET
NEW ENTRANTS
NEW MARKETS
NEW PRODUCTS
NOMINAL INTEREST RATE
OUTPUT
OUTREACH
PAYMENT SERVICES
PAYMENT SYSTEM
PENSION
PENSION FUND
PERFORMANCE MEASURES
POLITICAL ECONOMY
PORTFOLIO
PORTFOLIOS
POVERTY ALLEVIATION
PRIVATIZATION
PROFITABILITY
PRUDENTIAL REGULATIONS
PUBLIC CREDIT
PUBLIC POLICY
REAL ESTATE
REGULATORS
REGULATORY FRAMEWORK
REGULATORY FRAMEWORKS
REGULATORY POLICIES
REGULATORY REQUIREMENTS
REPUTATION
RETURN ON ASSETS
RISK DIVERSIFICATION
RISK MANAGEMENT
RISK OF BANK FAILURE
RISK PREMIUMS
RISK SHARING
RISK TAKING
SAFETY NET
SAVINGS
SECURITIES
SETTLEMENT SYSTEMS
SMALL BANKS
SUNSET CLAUSES
SUPERVISORY AGENCY
SUPERVISORY FRAMEWORK
SYSTEMIC BANKING CRISES
SYSTEMIC BANKING DISTRESS
SYSTEMIC RISK
TAXATION
TRANSITION COUNTRIES
VOLATILITY
spellingShingle ACCESS TO CREDIT
ACCESS TO FINANCE
ARBITRAGE
BALANCE SHEET
BANK ACQUISITIONS
BANK ACTIVITY
BANK ASSET
BANK CAPITALIZATION
BANK COMPETITION
BANK CONSOLIDATION
BANK FAILURE
BANK FAILURE RESOLUTION
BANK FAILURES
BANK FOR INTERNATIONAL SETTLEMENTS
BANK HOLDING COMPANIES
BANK LOANS
BANK MERGERS
BANK OF ENGLAND
BANK REGULATION
BANK RISK
BANK SUPERVISORS
BANKING CRISES
BANKING CRISIS
BANKING DISTRESS
BANKING INDUSTRY
BANKING REGULATION
BANKING RELATIONSHIPS
BANKING SECTOR
BANKING STABILITY
BANKING STRUCTURE
BANKING SYSTEM
BANKING SYSTEMS
BANKRUPTCY
BANKS
BARRIER
BARRIER TO ENTRY
BARRIERS TO ENTRY
CAPITAL CONTROLS
CAPITAL MARKET
CAPITAL MARKETS
CAPITAL RATIOS
CAPITAL REGULATION
CAPITAL REQUIREMENT
CAPITAL REQUIREMENTS
CENTRAL BANK
COMMERCIAL BANKING
COMMERCIAL BANKS
COMPETITIVE MARKETS
CONSOLIDATED SUPERVISION
CONSOLIDATION
CREDIT DECISIONS
CREDIT INFORMATION
CREDIT MARKET
CREDIT RATIONING
CREDIT REGISTRIES
CREDIT REGISTRY
CREDIT REPORTING
CREDIT RISK
CREDITORS
CROSS-BORDER BANKING
DEPOSIT
DEPOSIT INSURANCE
DEPOSIT INSURANCE PREMIUMS
DEPOSIT INSURANCE SCHEMES
DEPOSIT INTEREST RATE
DEPOSIT INTEREST RATES
DEPOSITOR
DEPOSITORS
DEPOSITS
DEREGULATION
DEVELOPING COUNTRIES
DIVERSIFICATION
DIVERSIFICATION BENEFITS
DOMESTIC BANK
EARNINGS
ECONOMIC GROWTH
ECONOMIES OF SCALE
EMERGING ECONOMIES
EMERGING MARKET
EMERGING MARKET ECONOMIES
EMERGING MARKETS
ENTRY BARRIERS
EQUILIBRIUM CREDIT
EQUILIBRIUM CREDIT RATIONING
EXCHANGE RATE
EXCHANGE RATE REGIMES
EXCHANGE RATES
EXPOSURES
FEDERAL RESERVE
FEDERAL RESERVE BANK
FEDERAL RESERVE SYSTEM
FINANCIAL CONGLOMERATES
FINANCIAL CRISES
FINANCIAL DEEPENING
FINANCIAL DISTRESS
FINANCIAL FRAGILITY
FINANCIAL INNOVATION
FINANCIAL INSTABILITY
FINANCIAL INSTITUTIONS
FINANCIAL INTEGRATION
FINANCIAL INTERMEDIARY
FINANCIAL INTERMEDIATION
FINANCIAL LIBERALIZATION
FINANCIAL MARKETS
FINANCIAL POLICY
FINANCIAL PRODUCTS
FINANCIAL RISK
FINANCIAL SAFETY
FINANCIAL SAFETY NET
FINANCIAL SAFETY NETS
FINANCIAL SECTOR
FINANCIAL SECTOR STABILITY
FINANCIAL SERVICES
FINANCIAL STABILITY
FINANCIAL SYSTEM
FINANCIAL SYSTEMS
FOREIGN BANK
FOREIGN BANKS
FOREIGN ENTRY
GOVERNMENT OWNERSHIP
GOVERNMENT POLICY
GROWTH RATE
ILLIQUIDITY
INEQUALITY
INFLATION
INFLATION RATE
INFORMATION SHARING
INITIAL INVESTMENT
INPUT PRICES
INSTITUTIONAL ENVIRONMENT
INSURANCE
INSURANCE DESIGN
INSURERS
INTEREST RATE
INTEREST RATE CEILINGS
INTEREST RATES
INTERNATIONAL BANK
INTERNATIONAL BANKING
INTERNATIONAL BANKS
INTERNATIONAL CAPITAL
INTERNATIONAL CAPITAL MARKET
INTERNATIONAL FINANCE
INTERNATIONAL RESERVES
INTERSTATE BANKING
INVESTMENT BANKING
LENDER
LENDER OF LAST RESORT
LENDERS
LIBERAL ENTRY
LOAN
LOAN CONTRACTS
LOAN DEFAULT
LOAN GUARANTEES
LOAN LOSS PROVISIONS
MARGINAL COST
MARKET PARTICIPANTS
MARKET SHARE
MARKET SHARES
MARKET STRUCTURE
MARKET STRUCTURES
MICROFINANCE
MONETARY POLICY
MONOPOLY
MORAL HAZARD
MORTGAGE
MORTGAGE MARKET
NEW ENTRANTS
NEW MARKETS
NEW PRODUCTS
NOMINAL INTEREST RATE
OUTPUT
OUTREACH
PAYMENT SERVICES
PAYMENT SYSTEM
PENSION
PENSION FUND
PERFORMANCE MEASURES
POLITICAL ECONOMY
PORTFOLIO
PORTFOLIOS
POVERTY ALLEVIATION
PRIVATIZATION
PROFITABILITY
PRUDENTIAL REGULATIONS
PUBLIC CREDIT
PUBLIC POLICY
REAL ESTATE
REGULATORS
REGULATORY FRAMEWORK
REGULATORY FRAMEWORKS
REGULATORY POLICIES
REGULATORY REQUIREMENTS
REPUTATION
RETURN ON ASSETS
RISK DIVERSIFICATION
RISK MANAGEMENT
RISK OF BANK FAILURE
RISK PREMIUMS
RISK SHARING
RISK TAKING
SAFETY NET
SAVINGS
SECURITIES
SETTLEMENT SYSTEMS
SMALL BANKS
SUNSET CLAUSES
SUPERVISORY AGENCY
SUPERVISORY FRAMEWORK
SYSTEMIC BANKING CRISES
SYSTEMIC BANKING DISTRESS
SYSTEMIC RISK
TAXATION
TRANSITION COUNTRIES
VOLATILITY
Beck, Thorsten
Bank Competition and Financial Stability : Friends or Foes?
relation Policy Research Working Paper No. 4656
description Theory makes ambiguous predictions about the relationship between market structure and competitiveness of the banking system and banking sector stability. Empirical studies focusing on individual countries provide similarly ambiguous results, while cross-country studies point mostly to a positive relationship between competition and stability in the banking system. Where liberalization and unfettered competition have resulted in fragility, this has been mostly the consequence of regulatory and supervisory failures. The advantages of competition for an efficient and inclusive financial system are strong, and regulatory and supervisory policies should focus on an incentive-compatible environment for banking rather than try to fine-tune market structure or the degree of competition.
format Publications & Research :: Policy Research Working Paper
author Beck, Thorsten
author_facet Beck, Thorsten
author_sort Beck, Thorsten
title Bank Competition and Financial Stability : Friends or Foes?
title_short Bank Competition and Financial Stability : Friends or Foes?
title_full Bank Competition and Financial Stability : Friends or Foes?
title_fullStr Bank Competition and Financial Stability : Friends or Foes?
title_full_unstemmed Bank Competition and Financial Stability : Friends or Foes?
title_sort bank competition and financial stability : friends or foes?
publisher World Bank, Washington, DC
publishDate 2012
url http://documents.worldbank.org/curated/en/2008/06/9605096/bank-competition-financial-stability-friends-or-foes
http://hdl.handle.net/10986/6863
_version_ 1764401007178022912
spelling okr-10986-68632021-04-23T14:02:32Z Bank Competition and Financial Stability : Friends or Foes? Beck, Thorsten ACCESS TO CREDIT ACCESS TO FINANCE ARBITRAGE BALANCE SHEET BANK ACQUISITIONS BANK ACTIVITY BANK ASSET BANK CAPITALIZATION BANK COMPETITION BANK CONSOLIDATION BANK FAILURE BANK FAILURE RESOLUTION BANK FAILURES BANK FOR INTERNATIONAL SETTLEMENTS BANK HOLDING COMPANIES BANK LOANS BANK MERGERS BANK OF ENGLAND BANK REGULATION BANK RISK BANK SUPERVISORS BANKING CRISES BANKING CRISIS BANKING DISTRESS BANKING INDUSTRY BANKING REGULATION BANKING RELATIONSHIPS BANKING SECTOR BANKING STABILITY BANKING STRUCTURE BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BANKS BARRIER BARRIER TO ENTRY BARRIERS TO ENTRY CAPITAL CONTROLS CAPITAL MARKET CAPITAL MARKETS CAPITAL RATIOS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CENTRAL BANK COMMERCIAL BANKING COMMERCIAL BANKS COMPETITIVE MARKETS CONSOLIDATED SUPERVISION CONSOLIDATION CREDIT DECISIONS CREDIT INFORMATION CREDIT MARKET CREDIT RATIONING CREDIT REGISTRIES CREDIT REGISTRY CREDIT REPORTING CREDIT RISK CREDITORS CROSS-BORDER BANKING DEPOSIT DEPOSIT INSURANCE DEPOSIT INSURANCE PREMIUMS DEPOSIT INSURANCE SCHEMES DEPOSIT INTEREST RATE DEPOSIT INTEREST RATES DEPOSITOR DEPOSITORS DEPOSITS DEREGULATION DEVELOPING COUNTRIES DIVERSIFICATION DIVERSIFICATION BENEFITS DOMESTIC BANK EARNINGS ECONOMIC GROWTH ECONOMIES OF SCALE EMERGING ECONOMIES EMERGING MARKET EMERGING MARKET ECONOMIES EMERGING MARKETS ENTRY BARRIERS EQUILIBRIUM CREDIT EQUILIBRIUM CREDIT RATIONING EXCHANGE RATE EXCHANGE RATE REGIMES EXCHANGE RATES EXPOSURES FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE SYSTEM FINANCIAL CONGLOMERATES FINANCIAL CRISES FINANCIAL DEEPENING FINANCIAL DISTRESS FINANCIAL FRAGILITY FINANCIAL INNOVATION FINANCIAL INSTABILITY FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL INTERMEDIARY FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL POLICY FINANCIAL PRODUCTS FINANCIAL RISK FINANCIAL SAFETY FINANCIAL SAFETY NET FINANCIAL SAFETY NETS FINANCIAL SECTOR FINANCIAL SECTOR STABILITY FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN BANK FOREIGN BANKS FOREIGN ENTRY GOVERNMENT OWNERSHIP GOVERNMENT POLICY GROWTH RATE ILLIQUIDITY INEQUALITY INFLATION INFLATION RATE INFORMATION SHARING INITIAL INVESTMENT INPUT PRICES INSTITUTIONAL ENVIRONMENT INSURANCE INSURANCE DESIGN INSURERS INTEREST RATE INTEREST RATE CEILINGS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKING INTERNATIONAL BANKS INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKET INTERNATIONAL FINANCE INTERNATIONAL RESERVES INTERSTATE BANKING INVESTMENT BANKING LENDER LENDER OF LAST RESORT LENDERS LIBERAL ENTRY LOAN LOAN CONTRACTS LOAN DEFAULT LOAN GUARANTEES LOAN LOSS PROVISIONS MARGINAL COST MARKET PARTICIPANTS MARKET SHARE MARKET SHARES MARKET STRUCTURE MARKET STRUCTURES MICROFINANCE MONETARY POLICY MONOPOLY MORAL HAZARD MORTGAGE MORTGAGE MARKET NEW ENTRANTS NEW MARKETS NEW PRODUCTS NOMINAL INTEREST RATE OUTPUT OUTREACH PAYMENT SERVICES PAYMENT SYSTEM PENSION PENSION FUND PERFORMANCE MEASURES POLITICAL ECONOMY PORTFOLIO PORTFOLIOS POVERTY ALLEVIATION PRIVATIZATION PROFITABILITY PRUDENTIAL REGULATIONS PUBLIC CREDIT PUBLIC POLICY REAL ESTATE REGULATORS REGULATORY FRAMEWORK REGULATORY FRAMEWORKS REGULATORY POLICIES REGULATORY REQUIREMENTS REPUTATION RETURN ON ASSETS RISK DIVERSIFICATION RISK MANAGEMENT RISK OF BANK FAILURE RISK PREMIUMS RISK SHARING RISK TAKING SAFETY NET SAVINGS SECURITIES SETTLEMENT SYSTEMS SMALL BANKS SUNSET CLAUSES SUPERVISORY AGENCY SUPERVISORY FRAMEWORK SYSTEMIC BANKING CRISES SYSTEMIC BANKING DISTRESS SYSTEMIC RISK TAXATION TRANSITION COUNTRIES VOLATILITY Theory makes ambiguous predictions about the relationship between market structure and competitiveness of the banking system and banking sector stability. Empirical studies focusing on individual countries provide similarly ambiguous results, while cross-country studies point mostly to a positive relationship between competition and stability in the banking system. Where liberalization and unfettered competition have resulted in fragility, this has been mostly the consequence of regulatory and supervisory failures. The advantages of competition for an efficient and inclusive financial system are strong, and regulatory and supervisory policies should focus on an incentive-compatible environment for banking rather than try to fine-tune market structure or the degree of competition. 2012-06-01T15:52:36Z 2012-06-01T15:52:36Z 2008-06 http://documents.worldbank.org/curated/en/2008/06/9605096/bank-competition-financial-stability-friends-or-foes http://hdl.handle.net/10986/6863 English Policy Research Working Paper No. 4656 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research