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Banking Competition And Capital Ratios
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Book Synopsis Banking Competition and Capital Ratios by : Martin Cihák
Download or read book Banking Competition and Capital Ratios written by Martin Cihák and published by International Monetary Fund. This book was released on 2007-09 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: We use data for more than 2,600 European banks to test whether increased competition causes banks to hold higher capital ratios. Employing panel data techniques, and distinguishing between the competitive conduct of small and large banks, we show that banks tend to hold higher capital ratios when operating in a more competitive environment. This result holds when controlling for the degree of concentration in banking systems, inter-industry competition, characteristics of the wider financial system, and the regulatory and institutional environment.
Book Synopsis Banking Competition, Risk, and Regulation by : Wilko Bolt
Download or read book Banking Competition, Risk, and Regulation written by Wilko Bolt and published by . This book was released on 2004 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Competition and Bank Risk the Role of Securitization and Bank Capital by : Yener Altunbas
Download or read book Competition and Bank Risk the Role of Securitization and Bank Capital written by Yener Altunbas and published by International Monetary Fund. This book was released on 2019-07-02 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine how bank competition in the run-up to the 2007–2009 crisis affects banks’ systemic risk during the crisis. We then investigate whether this effect is influenced by two key bank characteristics: securitization and bank capital. Using a sample of the largest listed banks from 15 countries, we find that greater market power at the bank level and higher competition at the industry level lead to higher realized systemic risk. The results suggest that the use of securitization exacerbates the effects of market power on the systemic dimension of bank risk, while capitalization partially mitigates its impact.
Book Synopsis Competition and Entry in Banking by : Arnoud W. A. Boot
Download or read book Competition and Entry in Banking written by Arnoud W. A. Boot and published by . This book was released on 2011 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: We assess how capital regulation interacts with the degree of competitiveness of the banking industry. We particularly ask two questions: i) how does capital regulation affect endogenous entry; and ii) how do changes in the competitive environment affect bank monitoring choices and the effectiveness of capital regulation? Our approach deviates from the extant literature in that it allows for heterogeneous bank quality and recognizes the fixed costs associated with the banks' monitoring technologies. Our most striking result is that increasing costly capital requirements can lead to more entry into banking, essentially by reducing the competitive strength of lower quality banks. We show that an implication of this is that banks may want the regulator to impose a higher capital requirement on the industry than is socially optimal. We also show that competition improves the monitoring incentives of better quality banks and deteriorates the incentives of lower quality banks; and that precisely for those lower quality banks competition typically compromises the effectiveness of capital requirements. We generalize the analysis along a few dimensions, including an analysis of the effects of asymmetric competition, e.g. one country that opens up its banking system for competitors but not vice versa.
Book Synopsis Bank Risk-Taking and Competition Revisited by : Mr.Gianni De Nicolo
Download or read book Bank Risk-Taking and Competition Revisited written by Mr.Gianni De Nicolo and published by International Monetary Fund. This book was released on 2003-06-01 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study reinvestigates the theoretical relationship between competition in banking and banks' exposure to risk of failure. There is a large existing literature that concludes that when banks are confronted with increased competition, they rationally choose more risky portfolios. We briefly review this literature and argue that it has had a significant influence on regulators and central bankers, causing them to take a less favorable view of competition and encouraging anti-competitive consolidation as a response to banking instability. We then show that existing theoretical analyses of this topic are fragile, since they do not detect two fundamental risk-incentive mechanisms that operate in exactly the opposite direction, causing banks to aquire more risk per portfolios as their markets become more concentrated. We argue that these mechanisms should be essential ingredients of models of bank competition.
Author :United States. Congress. Senate. Committee on Banking, Housing, and Urban Affairs Publisher : ISBN 13 : Total Pages :976 pages Book Rating :4.:/5 (327 download)
Book Synopsis Compendium of Major Issues in Bank Regulation by : United States. Congress. Senate. Committee on Banking, Housing, and Urban Affairs
Download or read book Compendium of Major Issues in Bank Regulation written by United States. Congress. Senate. Committee on Banking, Housing, and Urban Affairs and published by . This book was released on 1975 with total page 976 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Banking Competition, Risk, and Regulation by : Wilko Bolt
Download or read book Banking Competition, Risk, and Regulation written by Wilko Bolt and published by . This book was released on 2011 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a dynamic theoretical framework, commercial banks compete for customers by setting acceptance criteria for granting loans, taking regulatory requirements into account. By easing its acceptance criteria a bank faces a trade-off between attracting more demand for loans, thus making higher per period profits, and a deterioration of the quality of its loan portfolio, thus tolerating a higher risk of failure. Our main results state that more stringent capital adequacy requirements lead banks to set stricter acceptance criteria, and that increased competition in the banking industry leads to riskier bank behavior. In an extension of our basic model, we show that it may be beneficial for a bank to hold more equity than prescribed by the regulator, even though holding equity is more expensive than attracting deposits.
Book Synopsis How Does Bank Competition Affect Solvency, Liquidity and Credit Risk? Evidence from the MENA Countries by : Raja Almarzoqi
Download or read book How Does Bank Competition Affect Solvency, Liquidity and Credit Risk? Evidence from the MENA Countries written by Raja Almarzoqi and published by International Monetary Fund. This book was released on 2015-09-29 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper analyzes the relationship between bank competition and stability, with a specific focus on the Middle East and North Africa. Price competition has a positive effect on bank liquidity, as it induces self-discipline incentives on banks for the choice of bank funding sources and for the holding of liquid assets. On the other hand, price competition may have a potentially negative impact on bank solvency and on the credit quality of the loan portfolio. More competitive banks may be less solvent if the potential increase in the equity base—due to capital adjustments—is not large enough to compensate for the reduction in bank profitability. Also, banks subject to stronger competitive pressures may have a higher rate of nonperforming loans, if the increase in the risk-taking incentives from the lender’s side overcomes the decrease in the credit risk from the borrower’s side. In both cases, country-specific policies for market entry conditions—and for bank regulation and supervision—may significantly affect the sign and the size of the relationship. The paper suggests policy reforms designed to improve market contestability and to increase the quality and independence of prudential supervision.
Book Synopsis Bank Capital and the Cost of Equity by : Mohamed Belkhir
Download or read book Bank Capital and the Cost of Equity written by Mohamed Belkhir and published by International Monetary Fund. This book was released on 2019-12-04 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a sample of publicly listed banks from 62 countries over the 1991-2017 period, we investigate the impact of capital on banks’ cost of equity. Consistent with the theoretical prediction that more equity in the capital mix leads to a fall in firms’ costs of equity, we find that better capitalized banks enjoy lower equity costs. Our baseline estimations indicate that a 1 percentage point increase in a bank’s equity-to-assets ratio lowers its cost of equity by about 18 basis points. Our results also suggest that the form of capital that investors value the most is sheer equity capital; other forms of capital, such as Tier 2 regulatory capital, are less (or not at all) valued by investors. Additionally, our main finding that capital has a negative effect on banks’ cost of equity holds in both developed and developing countries. The results of this paper provide the missing evidence in the debate on the effects of higher capital requirements on banks’ funding costs.
Book Synopsis Competition and Stability in Banking by : Xavier Vives
Download or read book Competition and Stability in Banking written by Xavier Vives and published by Princeton University Press. This book was released on 2020-11-03 with total page 344 pages. Available in PDF, EPUB and Kindle. Book excerpt: A distinguished economist examines competition, regulation, and stability in today's global banks Does too much competition in banking hurt society? What policies can best protect and stabilize banking without stifling it? Institutional responses to such questions have evolved over time, from interventionist regulatory control after the Great Depression to the liberalization policies that started in the United States in the 1970s. The global financial crisis of 2007–2009, which originated from an oversupply of credit, once again raised questions about excessive banking competition and what should be done about it. Competition and Stability in Banking addresses the critical relationships between competition, regulation, and stability, and the implications of coordinating banking regulations with competition policies. Xavier Vives argues that while competition is not responsible for fragility in banking, there are trade-offs between competition and stability. Well-designed regulations would alleviate these trade-offs but not eliminate them, and the specificity of competition in banking should be accounted for. Vives argues that regulation and competition policy should be coordinated, with tighter prudential requirements in more competitive situations, but he also shows that supervisory and competition authorities should stand separate from each other, each pursuing its own objective. Vives reviews the theory and empirics of banking competition, drawing on up-to-date analysis that incorporates the characteristics of modern market-based banking, and he looks at regulation, competition policies, and crisis interventions in Europe and the United States, as well as in emerging economies. Focusing on why banking competition policies are necessary, Competition and Stability in Banking examines regulation's impact on the industry's efficiency and effectiveness.
Book Synopsis Bank Competition and Financial Stability by : OECD
Download or read book Bank Competition and Financial Stability written by OECD and published by OECD Publishing. This book was released on 2011-10-05 with total page 87 pages. Available in PDF, EPUB and Kindle. Book excerpt: This report examines the interplay between banking competition and financial stability, taking into account the experiences in the recent global crisis and the policy response to it. The report has been prepared by members of the Directorate of ...
Book Synopsis Does Going Tough on Banks Make the Going Get Tough? Bank Liquidity Regulations, Capital Requirements, and Sectoral Activity by : Ms.Deniz O Igan
Download or read book Does Going Tough on Banks Make the Going Get Tough? Bank Liquidity Regulations, Capital Requirements, and Sectoral Activity written by Ms.Deniz O Igan and published by International Monetary Fund. This book was released on 2020-06-19 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: Whether and to what extent tougher bank regulation weighs on economic growth is an open empirical question. Using data from 28 manufacturing industries in 50 countries, we explore the extent to which cross-country differences in bank liquidity and capital levels were related to differences in sectoral activity around the period of the global financial crisis. We find that industries which are more dependent on external finance, in countries where banks had higher liquidity and capital ratios, performed relatively better during the crisis, with regard to investment rates and the creation of new enterprises. This relationship, however, exists only for bank-based systems and emerging market economies. In the pre-crisis period, we find only a marginal link to bank capital. These findings survive a battery of robustness checks and provide some solid support for the tighter prudential measures introduced under Basel III.
Book Synopsis Financial Intermediation, Competition, and Risk: A General Equilibrium Exposition by : Gianni De Nicoló
Download or read book Financial Intermediation, Competition, and Risk: A General Equilibrium Exposition written by Gianni De Nicoló and published by INTERNATIONAL MONETARY FUND. This book was released on 2009-05-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study a simple general equilibrium model in which investment in a risky technology is subject to moral hazard and banks can extract market power rents. We show that more bank competition results in lower economy-wide risk, lower bank capital ratios, more efficient production plans and Pareto-ranked real allocations. Perfect competition supports a second best allocation and optimal levels of bank risk and capitalization. These results are at variance with those obtained by a large literature that has studied a similar environment in partial equilibrium. Importantly, they are empirically relevant, and demonstrate the need of general equilibrium modeling to design financial policies aimed at attaining socially optimal levels of systemic risk in the economy.
Book Synopsis Proceedings of a Conference on Bank Structure and Competition by :
Download or read book Proceedings of a Conference on Bank Structure and Competition written by and published by . This book was released on 1994 with total page 680 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Capital Requirements and Competition in the Banking Industry by :
Download or read book Capital Requirements and Competition in the Banking Industry written by and published by . This book was released on with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The Federal Reserve Bank of Chicago presents the full text of an article entitled "Capital Requirements and Competition in the Banking Industry," by Peter J.G. Vlaar. The article discusses how capital requirements affect the profitability of banks that compete as Cournot duopolists on a market for loans.
Book Synopsis Capital in Banking by : George G. Kaufman
Download or read book Capital in Banking written by George G. Kaufman and published by . This book was released on 1991 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author :United States. Congress. House. Committee on Banking, Finance, and Urban Affairs. Subcommittee on General Oversight and Investigations Publisher : ISBN 13 : Total Pages :124 pages Book Rating :4.0/5 (18 download)
Book Synopsis Risk-based Capital Requirements for Banks and Bank Holding Companies by : United States. Congress. House. Committee on Banking, Finance, and Urban Affairs. Subcommittee on General Oversight and Investigations
Download or read book Risk-based Capital Requirements for Banks and Bank Holding Companies written by United States. Congress. House. Committee on Banking, Finance, and Urban Affairs. Subcommittee on General Oversight and Investigations and published by . This book was released on 1987 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt:
