Abstract

https://ssrn.com/abstract=2423584
 
 

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Bank Competition and Financial Stability: Evidence from the Financial Crisis


Brian Akins


Rice University - Jesse H. Jones Graduate School of Business

Lynn Li


Boston University - Questrom School of Business

Jeffrey Ng


Hong Kong Polytechnic University - School of Accounting and Finance

Tjomme O. Rusticus


University of Minnesota

April 10, 2014

Journal of Financial and Quantitative Analysis, 51(1), (2016), 1-28.
Boston U. School of Management Research Paper No. 2423584
Singapore Management University School of Accountancy Research Paper No. 2014-17

Abstract:     
We examine the link between bank competition and financial stability using the recent financial crisis as the setting. We utilize variation in banking competition at the state level and find that banks facing less competition are more likely to engage in risky activities, more likely to face regulatory intervention, and more likely to fail. Focusing on the real estate market, we find that states with less competition had higher rates of mortgage approval, experienced greater housing price inflation before the crisis, and a steeper housing price decline during it. Overall, our study is consistent with greater competition increasing financial stability.

Number of Pages in PDF File: 51

Keywords: competition, risk-taking, bank regulation, bank failure

JEL Classification: G01, G21, G33


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Date posted: April 12, 2014 ; Last revised: June 2, 2016

Suggested Citation

Akins, Brian and Li, Lynn and Ng, Jeffrey and Rusticus, Tjomme O., Bank Competition and Financial Stability: Evidence from the Financial Crisis (April 10, 2014). Journal of Financial and Quantitative Analysis, 51(1), (2016), 1-28.; Boston U. School of Management Research Paper No. 2423584; Singapore Management University School of Accountancy Research Paper No. 2014-17. Available at SSRN: https://ssrn.com/abstract=2423584

Contact Information

Brian K. Akins
Rice University - Jesse H. Jones Graduate School of Business ( email )
6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States
Lynn Li
Boston University - Questrom School of Business ( email )
595 Commonwealth Avenue
Boston, MA MA 02215
United States
Jeffrey Ng
Hong Kong Polytechnic University - School of Accounting and Finance ( email )
Hung Hom
Kowloon
Hong Kong
Tjomme O. Rusticus (Contact Author)
University of Minnesota ( email )
Carlson School of Management
321 19th Avenue South, Room 3-122
Minneapolis, MN 55455
United States
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