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Bank Competition and Stability: Cross-Country HeterogeneityThorsten BeckTilburg University - European Banking Center, CentER Olivier De JongheTilburg University - Department of Finance; Tilburg University - European Banking Center Glenn SchepensGhent University - Department of Financial Economics June 11, 2012 Journal of Financial Intermediation, Forthcoming Abstract: This paper documents large cross-country variation in the relationship between bank competition and bank stability and explores market, regulatory and institutional features that can explain this variation. We show that an increase in competition will have a larger impact on banks’ fragility in countries with stricter activity restrictions, lower systemic fragility, better developed stock exchanges, more generous deposit insurance and more effective systems of credit information sharing. The effects are economically large and thus have important repercussions for the current regulatory reform debate.
Number of Pages in PDF File: 54 Keywords: Competition, Stability, Banking, Herding, Deposit Insurance, Information Sharing, Risk Shifting JEL Classification: G21, G28, L51 working papers seriesDate posted: November 19, 2010 ; Last revised: October 21, 2012Suggested CitationContact Information
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