The Theory of Bank Risk Taking and Competition Revisited
Tóm tắt
There is a large body of literature that concludes that—when confronted with increased competition—banks rationally choose more risky portfolios. We argue that this literature has had a significant influence on regulators and central bankers. We review the empirical literature and conclude that the evidence is best described as “mixed.” We then show that existing theoretical analyses of this topic are fragile, since there exist fundamental risk‐incentive mechanisms that operate in exactly the opposite direction, causing banks to become more risky as their markets become more concentrated. These mechanisms should be essential ingredients of models of bank competition.
Từ khóa
Tài liệu tham khảo
Allen Franklin, 2000, Comparing Financial Systems
Beck Thorsten AsliDemirguc‐Kunt andRossLevine 2003 Bank concentration and crises Working paper University of Minnesota .
Boyd John H. andGianniDe Nicoló 2003 Bank risk‐taking and competition revisited Working paper no. 03/114 International Monetary Fund .
Caprio Gerald andDanielaKinglebiel 1999 Episodes of systematic and borderline financial distress Manuscript The World Bank.
Caprio Gerald, 2000, Modernizing Financial Systems
Carletti Elena, 2003, Monetary History, Exchange Rates and Financial Markets: Essays in honor of Charles Goodhart
De Nicoló Gianni 2000 Size charter value and risk in banking: An international perspective International Finance Discussion Paper no. 689 Board of Governors of the Federal Reserve System.
Dick Astrid, 2006, Nationwide branching and its impact on market structure, quality and bank performance, Journal of Business, 79
Group of Ten, 2001, Report on consolidation in the financial sector, Bank for International Settlements
Keeley Michael, 1990, Deposit insurance, risk and market power in banking, American Economic Review, 80, 1183
Repullo Raphael 2003 Capital requirements market power and risk‐taking in banking Discussion paper no. 3721 CEPR.