Competition and Stability in Banking

CPB Document No. 15

153 Pages Posted: 13 Jan 2002

See all articles by M. F. M. Canoy

M. F. M. Canoy

University of tilburg

Machiel F. van Dijk

CPB Netherlands Bureau of Economic Policy Analysis

Jan J. G. Lemmen

CESifo (Center for Economic Studies and Ifo Institute); Radboud University Nijmegen

Ruud A. De Mooij

International Monetary Fund (IMF); CESifo (Center for Economic Studies and Ifo Institute); Oxford University Centre for Business Taxation

Jürgen Weigand

Wissenschaftliche Hochschule fuer Unternehmensfuehrung (WHU) Koblenz

Date Written: December 2001

Abstract

More competition among banks typically enhances the welfare of consumers. However, it may also involve a threat to financial stability, that is of vital importance for the functioning of economies. This study reveals that many forms of competition do not endanger financial stability, however. For instance, intensified competition among incumbant banks usually has little impact on financial stability. Moreover, in cases where competition does affect financial stability, the latter might best be safeguarded by sound prudential regulation or good corporate governance.

Keywords: Banks, competition, financial stability, government policy

JEL Classification: G21, G28, G32, G38

Suggested Citation

Canoy, Marcel F. M. and van Dijk, Machiel F. and Lemmen, Jan J. G. and Lemmen, Jan J. G. and De Mooij, Ruud A. and Weigand, Jürgen, Competition and Stability in Banking (December 2001). CPB Document No. 15, Available at SSRN: https://ssrn.com/abstract=296479 or http://dx.doi.org/10.2139/ssrn.296479

Marcel F. M. Canoy

University of tilburg ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://www.tilburguniversity.edu/research/institutes-and-research-groups/tilec/

Machiel F. Van Dijk

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O.Box 80510
Market Services Unit
2508 GM Den Haag
Netherlands
(31) 70 338 3397 (Phone)
(31) 70 3383350 (Fax)

HOME PAGE: http://www.cpb.nl/nl/general/org/homepages/mfvd/

Jan J. G. Lemmen (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Radboud University Nijmegen ( email )

Thomas van Aquinostraat 3
P.O. Box 9108
Nijmegen, 6500HK
Netherlands
+31-24-3611599 (Phone)

HOME PAGE: http://www.ru.nl/nsm/home/virtuele_map/welcome/

Ruud A. De Mooij

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Oxford University Centre for Business Taxation ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

HOME PAGE: http://people.few.eur.nl/demooij/

Jürgen Weigand

Wissenschaftliche Hochschule fuer Unternehmensfuehrung (WHU) Koblenz ( email )

Burgplatz 2
Vallendar, 56179
Germany

HOME PAGE: http://www.whu.edu/mikro

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