Abstract

http://ssrn.com/abstract=1884152
 
 

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Does Prudential Regulation Harm Competition in the Banking Sector?


Rudiger Ahrend


Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

Jens Matthias Arnold


Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

July 2011

Paolo Baffi Centre Research Paper No. 2011-98

Abstract:     
Using bank-level data from 38 countries, this paper examines how a range of stability-oriented regulatory policies for banking are related to competition outcomes. Based on policy indicators constructed at the OECD for eight areas of prudential banking regulation, the results do not support the view that there is a general trade-off between stability-oriented regulatory policies and competition in banking. Only stringent entry and ownership regulations seem to have an anticompetitive effect, and some areas of prudential regulation - most notably the strength of the banking supervisor – are even associated with greater competition in banking. Overall, the results suggest that stability-enhancing regulatory reform does not need to come at the expense of competition.

Number of Pages in PDF File: 25

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Date posted: July 12, 2011  

Suggested Citation

Ahrend, Rudiger and Arnold, Jens Matthias, Does Prudential Regulation Harm Competition in the Banking Sector? (July 2011). Paolo Baffi Centre Research Paper No. 2011-98. Available at SSRN: http://ssrn.com/abstract=1884152 or http://dx.doi.org/10.2139/ssrn.1884152

Contact Information

Rudiger Ahrend
Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )
2 rue Andre Pascal
Paris Cedex 16, MO 63108
France
Jens Matthias Arnold (Contact Author)
Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )
2 rue Andre Pascal
Paris Cedex 16, 75775
France
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