Competition Liquidity And Stability

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Competition, Liquidity and Stability

Author : Thi Ngoc My Nguyen
Publisher :
ISBN 13 :
Total Pages : 910 pages
Book Rating : 4.:/5 (11 download)

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Book Synopsis Competition, Liquidity and Stability by : Thi Ngoc My Nguyen

Download or read book Competition, Liquidity and Stability written by Thi Ngoc My Nguyen and published by . This book was released on 2014 with total page 910 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis investigates the impact of market power on bank liquidity; the association between competition and systemic liquidity; and whether the associations between liquidity and stability at both bank- and systemic- levels are affected by competition. The first research question is explored in the context of 101 countries over 1996-2013 while the second and the third, which require listed banks, use a smaller sample of 32 nations during 2001-2013. The Panel Least Squares and the system Generalized Method of Moments estimators are employed to assess these associations. These research issues are further examined separately for countries with different level of economic development. Such divisions are essential since these countries exhibit varying degrees of market power, banking competition, liquidity risk preference, regulations and financial infrastructures.Regarding the market power-liquidity relationship, the findings suggest an inverted U-shaped association between market power and bank liquidity. With an initial increase in market power, banks increase their liquid assets and become net lenders in the interbank markets. When market power exceeds a certain threshold, however, banks hold less liquid assets and become net interbank borrowers. For a given level of market power, ceteris paribus, banks in more developed nations have lower investments in asset liquidity and obtain more funding through the interbank market than those in their developing country counterparts. While competition benefits bank-level asset and funding liquidity, it decreases systemic liquidity. By affecting loan profitability and banks' incentives to hold liquid reserves, competition influences interbank market liquidity and thus asset prices. This in turn influences banks' ability to withstand liquidity shocks and systemic liquidity crises. On the impact of competition on the association between liquidity and stability, bank market power seems to reinforce the positive impact of funding liquidity on bank stability. In contrast, banking systemic liquidity appears only to enhance systemic stability in less competitive markets. This is because greater competition encourages banks to assume more risks (i.e. credit and capital risks) that offset systemic liquidity's positive impact. This thesis offers several contributions to the bank liquidity hoarding and industrial organization literatures by showing that bank liquidity risk varies with market power. It similarly expands the financial intermediation literature by providing evidence that strategic interactions among banks expose them to systemic liquidity crises. It further adds to the competition-stability literature by providing evidence that competition leads to a reversal of the benefits of liquidity on stability at both bank- and systemic- levels. It also improves the prior methodology by deriving a systemic liquidity risk indicator using a Principal Component Analysis, examining both bank- and systemic-levels of liquidity and stability, employing a three year rolling window to reflect more frequent changes of competition over time and using bank distance-to-capital proposed by Chan-Lau and Sy (2007) in addition to the traditional distance-to-default in calculating banking systemic stability. These findings should have implications for policymakers, regulators, central bankers and investors in wide-range of countries. Policy makers should benefit from learning that the new international bank liquidity standards (fully implemented by 2019) incorporate an adjustment to reflect bank market power and competition. Regulators should also avoid "one size fits all" approach as bank liquidity is influenced by cross-country differences in regulation, industry characteristics, financial development and presence/absence of explicit deposit guarantees. Central bankers should learn the impact of competition on liquidity and stability when extending their liquidity support. Finally, investors should be aware their banks' competitive environment and liquidity position before investing.

Bank Competition, Efficiency and Liquidity Creation in Asia Pacific

Author : N. Genetay
Publisher : Springer
ISBN 13 : 1137533846
Total Pages : 246 pages
Book Rating : 4.1/5 (375 download)

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Book Synopsis Bank Competition, Efficiency and Liquidity Creation in Asia Pacific by : N. Genetay

Download or read book Bank Competition, Efficiency and Liquidity Creation in Asia Pacific written by N. Genetay and published by Springer. This book was released on 2015-07-28 with total page 246 pages. Available in PDF, EPUB and Kindle. Book excerpt: Banking market integration in the Asia Pacific has greatly accelerated in recent years, in an environment of many other rapid advances in banking and finance. This has increased competition between domestic and foreign banks, and made the measurement of bank efficiency, competition, and liquidity creation a critical issue for both policy makers and bank managers. This book investigates important policy-related issues in Asia Pacific banking. It analyses the link between competition and stability, examining the cases of fourteen Asia Pacific countries between 2003 and 2010, and goes on to discuss whether bank shareholder value is influenced by cost and profit efficiency changes over time. The authors explore the different ways in which banks in Asia-Pacific create liquidity, and whether this is linked to capital generation. This book provides valuable insight for researchers, policy makers and bank managers with an interest in financial rationalization, restructuring and consolidation.

Bank Competition and Financial Stability

Author : Mr.Gianni De Nicolo
Publisher : International Monetary Fund
ISBN 13 : 1463927290
Total Pages : 39 pages
Book Rating : 4.4/5 (639 download)

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Book Synopsis Bank Competition and Financial Stability by : Mr.Gianni De Nicolo

Download or read book Bank Competition and Financial Stability written by Mr.Gianni De Nicolo and published by International Monetary Fund. This book was released on 2011-12-01 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study versions of a general equilibrium banking model with moral hazard under either constant or increasing returns to scale of the intermediation technology used by banks to screen and/or monitor borrowers. If the intermediation technology exhibits increasing returns to scale, or it is relatively efficient, then perfect competition is optimal and supports the lowest feasible level of bank risk. Conversely, if the intermediation technology exhibits constant returns to scale, or is relatively inefficient, then imperfect competition and intermediate levels of bank risks are optimal. These results are empirically relevant and carry significant implications for financial policy.

How Does Bank Competition Affect Solvency, Liquidity and Credit Risk? Evidence from the MENA Countries

Author : Raja Almarzoqi
Publisher : International Monetary Fund
ISBN 13 : 1513505831
Total Pages : 43 pages
Book Rating : 4.5/5 (135 download)

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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.

Bank Competition and Financial Stability

Author : OECD
Publisher : OECD Publishing
ISBN 13 : 9264120564
Total Pages : 87 pages
Book Rating : 4.2/5 (641 download)

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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 ...

Competition and Stability in Banking

Author : M. F. M. Canoy
Publisher :
ISBN 13 :
Total Pages : 153 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Competition and Stability in Banking by : M. F. M. Canoy

Download or read book Competition and Stability in Banking written by M. F. M. Canoy and published by . This book was released on 2002 with total page 153 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Competition and Stability in Banking

Author : Marcel Canoy
Publisher :
ISBN 13 :
Total Pages : 174 pages
Book Rating : 4.3/5 ( download)

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Book Synopsis Competition and Stability in Banking by : Marcel Canoy

Download or read book Competition and Stability in Banking written by Marcel Canoy and published by . This book was released on 2001 with total page 174 pages. Available in PDF, EPUB and Kindle. Book excerpt: The banking sector in Europe is subject to continuous change. Banks are taking up new types of business in order to diversify their risk; new players such as insurance companies, credit card providers, and non-financial companies enter market segments which used to be the territory of commercial banks; and banks increasingly operate outside their home country or merge with cross-border partners. These developments, triggered by new information technology, disintermediation, deregulation, and the arrival of the Euro, change the landscape in the banking sector and raise a number of policy issues. What are the implications for competition among banks? How can financial stability best be maintained in this changing market? Is there a conflict between increasing competition among banks and stability?

Banking Competition and Stability

Author : Xavier Freixas
Publisher :
ISBN 13 :
Total Pages : 40 pages
Book Rating : 4.:/5 (891 download)

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Book Synopsis Banking Competition and Stability by : Xavier Freixas

Download or read book Banking Competition and Stability written by Xavier Freixas and published by . This book was released on 2014 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reexamines the classical issue of the possible trade-offs between banking competition and financial stability by highlighting different types of risk and the role of leverage. By means of a simple model we show that competition can affect portfolio risk, insolvency risk, liquidity risk, and systemic risk differently. The effect depends crucially on banks' liability structure, on whether banks are financed by insured retail deposits or by uninsured wholesale debts, and on whether the indebtness is exogenous or endogenous. In particular we suggest that, while in a classical originate-to-hold banking industry competition might increase financial stability, the opposite can be true for an originate-to-distribute banking industry of a larger fraction of market short-term funding. This leads us to revisit the existing empirical literature using a more precise classification of risk. Our theoretical model therefore helps to clarify a number of apparently contradictory empirical results and proposes new ways to analyze the impact of banking competition on financial stability.

Competition and Stability in Banking

Author : Xavier Vives
Publisher : Princeton University Press
ISBN 13 : 0691210039
Total Pages : 344 pages
Book Rating : 4.6/5 (912 download)

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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.

Banking Competition and Stability

Author : Xavier Freixas
Publisher :
ISBN 13 :
Total Pages : 41 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Banking Competition and Stability by : Xavier Freixas

Download or read book Banking Competition and Stability written by Xavier Freixas and published by . This book was released on 2019 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reexamines the classical issue of the possible trade-offs between banking competition and financial stability by highlighting different types of risk and the role of leverage. By means of a simple model we show that competition can affect portfolio risk, insolvency risk, liquidity risk, and systemic risk differently. The effect depends crucially on banks' liability structure, on whether banks are financed by insured retail deposits or by uninsured wholesale debts, and on whether the indebtness is exogenous or endogenous. In particular we suggest that, while in a classical originate-to-hold banking industry competition might increase financial stability, the opposite can be true for an originate-to-distribute banking industry of a larger fraction of market short-term funding. This leads us to revisit the existing empirical literature using a more precise classification of risk. Our theoretical model therefore helps to clarify a number of apparently contradictory empirical results and proposes new ways to analyze the impact of banking competition on financial stability.

Measuring Liquidity in Financial Markets

Author : Abdourahmane Sarr
Publisher : International Monetary Fund
ISBN 13 :
Total Pages : 72 pages
Book Rating : 4.:/5 (318 download)

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Book Synopsis Measuring Liquidity in Financial Markets by : Abdourahmane Sarr

Download or read book Measuring Liquidity in Financial Markets written by Abdourahmane Sarr and published by International Monetary Fund. This book was released on 2002-12 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides an overview of indicators that can be used to illustrate and analyze liquidity developments in financial markets. The measures include bid-ask spreads, turnover ratios, and price impact measures. They gauge different aspects of market liquidity, namely tightness (costs), immediacy, depth, breadth, and resiliency. These measures are applied in selected foreign exchange, money, and capital markets to illustrate their operational usefulness. A number of measures must be considered because there is no single theoretically correct and universally accepted measure to determine a market's degree of liquidity and because market-specific factors and peculiarities must be considered.

Bank Liquidity Creation and Financial Crises

Author : Allen N. Berger
Publisher : Academic Press
ISBN 13 : 0128005319
Total Pages : 296 pages
Book Rating : 4.1/5 (28 download)

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Book Synopsis Bank Liquidity Creation and Financial Crises by : Allen N. Berger

Download or read book Bank Liquidity Creation and Financial Crises written by Allen N. Berger and published by Academic Press. This book was released on 2015-11-24 with total page 296 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bank Liquidity Creation and Financial Crises delivers a consistent, logical presentation of bank liquidity creation and addresses questions of research and policy interest that can be easily understood by readers with no advanced or specialized industry knowledge. Authors Allen Berger and Christa Bouwman examine ways to measure bank liquidity creation, how much liquidity banks create in different countries, the effects of monetary policy (including interest rate policy, lender of last resort, and quantitative easing), the effects of capital, the effects of regulatory interventions, the effects of bailouts, and much more. They also analyze bank liquidity creation in the US over the past three decades during both normal times and financial crises. Narrowing the gap between the "academic world" (focused on theories) and the "practitioner world" (dedicated to solving real-world problems), this book is a helpful new tool for evaluating a bank’s performance over time and comparing it to its peer group. Explains that bank liquidity creation is a more comprehensive measure of a bank’s output than traditional measures and can also be used to measure bank liquidity Describes how high levels of bank liquidity creation may cause or predict future financial crises Addresses questions of research and policy interest related to bank liquidity creation around the world and provides links to websites with data and other materials to address these questions Includes such hot-button topics as the effects of monetary policy (including interest rate policy, lender of last resort, and quantitative easing), the effects of capital, the effects of regulatory interventions, and the effects of bailouts

Managing Elevated Risk

Author : Iwan J. Azis
Publisher : Springer
ISBN 13 : 9812872841
Total Pages : 129 pages
Book Rating : 4.8/5 (128 download)

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Book Synopsis Managing Elevated Risk by : Iwan J. Azis

Download or read book Managing Elevated Risk written by Iwan J. Azis and published by Springer. This book was released on 2014-12-11 with total page 129 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book discusses the risks and opportunities that arise in Emerging Asia given the context of a new environment in global liquidity and capital flows. It elaborates on the need to ensure financial and overall economic stability in the region through improved financial regulation and other policy measures to minimize the emergent risks. "Managing Elevated Risk: Global Liquidity, Capital Flows, and Macroprudential Policy—An Asian Perspective" also explores the range of policy options that may be deployed to address the impact of global liquidity on domestic financial and socio-economic conditions including income inequality. The book is primarily aimed at policy makers, financial market regulators and supervisory agencies to help them improve national regulatory systems and to promote harmonization of national regulations and practices in line with global standards. Scholars and researchers will also gain important information and knowledge about the overall impacts of changing global liquidity from the book.

Liquidity, Markets and Trading in Action

Author : Deniz Ozenbas
Publisher : Springer Nature
ISBN 13 : 3030748170
Total Pages : 111 pages
Book Rating : 4.0/5 (37 download)

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Book Synopsis Liquidity, Markets and Trading in Action by : Deniz Ozenbas

Download or read book Liquidity, Markets and Trading in Action written by Deniz Ozenbas and published by Springer Nature. This book was released on 2022 with total page 111 pages. Available in PDF, EPUB and Kindle. Book excerpt: This open access book addresses four standard business school subjects: microeconomics, macroeconomics, finance and information systems as they relate to trading, liquidity, and market structure. It provides a detailed examination of the impact of trading costs and other impediments of trading that the authors call rictions It also presents an interactive simulation model of equity market trading, TraderEx, that enables students to implement trading decisions in different market scenarios and structures. Addressing these topics shines a bright light on how a real-world financial market operates, and the simulation provides students with an experiential learning opportunity that is informative and fun. Each of the chapters is designed so that it can be used as a stand-alone module in an existing economics, finance, or information science course. Instructor resources such as discussion questions, Powerpoint slides and TraderEx exercises are available online.

Canada

Author : International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
ISBN 13 : 1498321119
Total Pages : 85 pages
Book Rating : 4.4/5 (983 download)

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Book Synopsis Canada by : International Monetary Fund. Monetary and Capital Markets Department

Download or read book Canada written by International Monetary Fund. Monetary and Capital Markets Department and published by International Monetary Fund. This book was released on 2019-06-24 with total page 85 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Financial System Stability Assessment paper discusses that Canada has enjoyed favorable macroeconomic outcomes over the past decades, and its vibrant financial system continues to grow robustly. However, macrofinancial vulnerabilities—notably, elevated household debt and housing market imbalances—remain substantial, posing financial stability concerns. Various parts of the financial system are directly exposed to the housing market and/or linked through housing finance. The financial system would be able to manage severe macrofinancial shocks. Major deposit-taking institutions would remain resilient, but mortgage insurers would need additional capital in a severe adverse scenario. Housing finance is broadly resilient, notwithstanding some weaknesses in the small non-prime mortgage lending segment. Although banks’ overall capital buffers are adequate, additional required capital for mortgage exposures, along with measures to increase risk-based differentiation in mortgage pricing, would be desirable. This would help ensure adequate through-the cycle buffers, improve mortgage risk-pricing, and limit procyclical effects induced by housing market corrections.

Capital Markets and Financial Intermediation

Author : Colin Mayer
Publisher : Cambridge University Press
ISBN 13 : 9780521558532
Total Pages : 384 pages
Book Rating : 4.5/5 (585 download)

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Book Synopsis Capital Markets and Financial Intermediation by : Colin Mayer

Download or read book Capital Markets and Financial Intermediation written by Colin Mayer and published by Cambridge University Press. This book was released on 1995-09-29 with total page 384 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial intermediation is currently a subject of active research on both sides of the Atlantic. The integration of European financial markets, in particular, highlights several important issues. In this volume, derived from a joint CEPR conference with the Fundacion Banco Bilbao Vizcaya (BBV), leading academics from Europe and North America review 'state-of-the-art' theories of banking and financial intermediation and discuss their policy implications. The principal focus is on the risks of increased competition, the appropriate regulation of banks, and the differences between Anglo-American and Continental European forms of financial markets. Relationship banking, stock markets and banks, banking and corporate control, financial intermediation in Eastern Europe, monetary policy and the banking system, and financial intermediation and growth are also discussed.

Policies for Macrofinancial Stability

Author : Mr.Bas B. Bakker
Publisher : International Monetary Fund
ISBN 13 : 1475572689
Total Pages : 46 pages
Book Rating : 4.4/5 (755 download)

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Book Synopsis Policies for Macrofinancial Stability by : Mr.Bas B. Bakker

Download or read book Policies for Macrofinancial Stability written by Mr.Bas B. Bakker and published by International Monetary Fund. This book was released on 2012-06-07 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: This note explores the costs and benefits of different policy options to reduce the risks associated with credit booms, drawing upon several country experiences and the findings from econometric analysis.