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A Comment On The Effects Of Banking Competition On Growth And Financial Stability
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Book Synopsis A Comment on "The Effects of Banking Competition on Growth and Financial Stability" by : Andrea Calef
Download or read book A Comment on "The Effects of Banking Competition on Growth and Financial Stability" written by Andrea Calef and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Carlson et al. (2022) examine the causal impact of banking competition by investigating a unique circumstance in the National Banking Era of the nineteenth century in the US, where a discontinuity in bank capital requirements occurred. On the one hand, their findings suggest that banks operating in markets with fewer barriers to entry tend to increase their lending activities, promoting real economic growth. On the other hand, banks in less restricted markets also exhibit a higher propensity for risk-taking, posing risks to financial stability. First, we fully reproduce the paper's outcomes apart from a minor discrepancy in the estimate of Table 9 attributed to issues in the provided codes. Second, we test the robustness of the results by (i) changing the ranges used to select the sample of cities included in the analysis, (ii) adopting different options to address outliers' potential issues and (iii) introducing additional control variables. We observe that the estimation results remain mostly consistent when subjecting them to various robustness checks. However, it is worth highlighting that the results can be partially influenced by the criteria used to select the sample of cities and the inclusion of control variables.
Book Synopsis Competition Policy for Modern Banks by : Mr.Lev Ratnovski
Download or read book Competition Policy for Modern Banks written by Mr.Lev Ratnovski and published by International Monetary Fund. This book was released on 2013-05-23 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: Traditional bank competition policy seeks to balance efficiency with incentives to take risk. The main tools are rules guiding entry/exit and consolidation of banks. This paper seeks to refine this view in light of recent changes to financial services provision. Modern banking is largely market-based and contestable. Consequently, banks in advanced economies today have structurally low charter values and high incentives to take risk. In such an environment, traditional policies that seek to affect the degree of competition by focusing on market structure (i.e. concentration) may have limited effect. We argue that bank competition policy should be reoriented to deal with the too-big-to-fail (TBTF) problem. It should also focus on the permissible scope of activities rather than on market structure of banks. And following a crisis, competition policy should facilitate resolution by temporarily allowing higher concentration and government control of banks.
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 : 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.
Book Synopsis Commercial Banking by : Christopher Gan
Download or read book Commercial Banking written by Christopher Gan and published by MDPI. This book was released on 2021-09-03 with total page 142 pages. Available in PDF, EPUB and Kindle. Book excerpt: The existence of financial intermediaries is arguably an artifact of information asymmetry. Beyond simple financial transactions, financial intermediation provides a mechanism for information transmission, which can reduce the degree of information asymmetry and consequently increase market efficiency. During the process of information transmission, the bank is able to provide unique services in the production and exchange of information. Therefore, banks have comparative advantages in information production, transmission, and utilisation. This book provides an overview of commercial banking and includes empirical methods in banking such risk and bank performance, capital regulation, bank competition and foreign bank entry, bank regulation on bank performance, and capital adequacy and deposit insurance.
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 A Replication of "Bank Competition and Financial Stability: Much Ado about Nothing?" (Journal of Economic Surveys, 2016) by : Samangi Bandaranayake
Download or read book A Replication of "Bank Competition and Financial Stability: Much Ado about Nothing?" (Journal of Economic Surveys, 2016) written by Samangi Bandaranayake and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: "This study replicates Zigraiova and Havranek's (2016) meta-analysis of banking competition and financial stability. It performs three types of replications: a "Reproduction" replication where Z&H's data and code are verified to reproduce the results of their study; a "Repetition" replication where the studies used by Z&H are independently recoded and then re-analyzed; and an "Extension" replication, where 35 additional studies on banking competition and stability are examined to see if they confirm Z&H's findings. Our replication analyses confirm Z&H's main finding that competition in the banking sector is unrelated to financial stability. However, we do not confirm their finding of publication selection in the "Extension" replication, and both "Repetition" and "Extension" replications fail to confirm most of Z&H's findings about the effects of data, estimation, and study characteristics on estimated competition effects. While our "Repetition" replication produced a high match rate with Z&H's data, we found that the meta-regression analysis was substantively impacted by discrepancies between the original and recoded data. We conclude that meta-regression analyses should be viewed with caution. We also demonstrate that "best practice" estimates can be precarious and highly dependent on variable specification and how "best practice" is defined. They like wise should be viewed with caution. Our study highlights the value-added that replication brings to meta-analyses. While some of Z&H's results were found to not be robust, the fact that all three types of replications confirmed Z&H's main finding about competition and stability provides strong evidence that this finding can be regarded with confidence. Keywords: Bank competition, financial stability, Bayesian model averaging, meta-analysis, publication selection, replication."--Page [ii].
Book Synopsis The Purpose of Banking by : Anjan V. Thakor
Download or read book The Purpose of Banking written by Anjan V. Thakor and published by Oxford University Press, USA. This book was released on 2019 with total page 249 pages. Available in PDF, EPUB and Kindle. Book excerpt: Introduction: the columbo approach: a bird's eye view of the book -- Act i: the purpose of banks : what banks do and why -- Money, guns and lawyers : the business of banking -- The origins of baking and the services banks provide : customers, investors and other stakeholders -- Out of sigh out of ming? : off-balance sheet banking -- Act ii: bank decision-making and the regulation of banks : capital, regulation, purpose and culture -- When your chickens come home to roost : bank capital regulation and the search for financial stability -- Higher purpose, culture and capital : is banking on culture a capital idea? -- Act iii: banks and markets: interactions that affect stability and growth -- Financial system architecture : where do banks sit in the financial system? -- Changes in banking over time -- Act iv: financial crises: causes, effects and cures -- Financial crises and banks : what caused the great recession and what where its effects? -- Act v: reforming banking and looking ahead : improving banking and the potential interactions with fintech -- The final frontier : an improved banking system to achieve financial stability and economic growth -- Closing curtain : should banking be fundamentally resigned? -- Summing up and looking ahead: fintech and banking
Book Synopsis Bank Competition and Financial Stability by :
Download or read book Bank Competition and Financial Stability written by and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Banking Competition and Economic Stability by : Ronald D. Fischer
Download or read book Banking Competition and Economic Stability written by Ronald D. Fischer and published by . This book was released on 2013 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider a two-period model of a banking system to explore the effects of competition on the stability and efficiency of economic activity. In the model, competing banks lend to entrepreneurs. After entrepreneurs receive the loans for their projects, there is a probability of a shock. The shock implies that a fraction of firms will default and be unable to pay back their loans. This will require banks to use their capital and reserves to pay back depositors, restricting second period lending, thus amplifying the economic effect of the initial shock. There are two possible types of equilibria: a prudent equilibrium in which banks do not collapse after the shock, and an imprudent equilibrium where banks collapse. We examine the effects of increased competition in this setting.First, we find existence conditions for a prudent equilibrium. Second, we show that the effect of increased banking competition is to increase the efficiency of the economy at the expense of increased variance in second period economic results. In particular, if the probability of a shock is small, increased competition raises both expected GDP over the two periods and expected activity in the second period, after the shock. Increased competition also increases the attractiveness of imprudent equilibria.Unpredicted regulatory forbearance in the aftermath of a shock can be used to reduce or eliminate the variance in economic activity. However, if regulatory forbearance is expected in response to a shock, the effect on the variance of economic activity after the shock is ambiguous and can even lead to increased variance after a shock. Finally we show that independently of the type of equilibria or the possibility of a switch among types of equilibria, Increased banking competition increases the amplification effect after a shock.
Book Synopsis Another Look at "Bank Competition and Financial Stability: Much Ado about Nothing?" by : Samangi Bandaranayake
Download or read book Another Look at "Bank Competition and Financial Stability: Much Ado about Nothing?" written by Samangi Bandaranayake and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: "This study replicates Zigraiova and Havranek's (2016) meta-analysis of banking competition and financial stability. It performs multiple types of replications: a "Reproduction"replication where Z&H's data and code are verified to reproduce the results of their study; a "Repetition" replication where the studies used by Z&H are independently recoded and then re-analyzed; an "Extension" replication where additional studies on banking competition and stability are analyzed; and a "Robustness Analysis" where we check Z&H's results using an alternative empirical procedure. Our analysis strongly confirms Z&H's main finding that competition in the banking sector has an economically negligible effect on financial stability.This result is consistently confirmed across a variety of replication analyses. Most impressively, we confirm their finding even when we analyze a completely independent set of 35 studies not included in Z&H's meta-analysis. Our results for Z&H's other findings are less supportive. As the first comprehensive replication of a meta-analysis, this study also provides insights into the robustness of meta-analysis. We find that meta-regression analysis, where estimated effects are related to data, estimation, and study characteristics, is sensitive to how data are coded and to the choice of estimation procedure; and that this sensitivity extends to "best practice" estimates. Keywords: Bank competition, financial stability, Bayesian model averaging, meta-analysis,publication selection, replication"--Page [ii].
Download or read book Bank Ownership written by Robert Cull and published by International Monetary Fund. This book was released on 2017-03-22 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents recent trends in bank ownership across countries and summarizes the evidence regarding the implications of bank ownership structure for bank performance and competition, financial stability, and access to finance. The evidence reviewed suggests that foreign-owned banks are more efficient than domestic banks in developing countries, promote competition in host banking sectors, and help stabilize credit when host countries face idiosyncratic shocks. But there are tradeoffs, since foreign-owned banks can transmit external shocks and might not always expand access to credit. The record on the impact of government bank ownership suggests few benefits, especially for developing countries.
Book Synopsis The Effects of Government Interventions in the Financial Sector on Banking Competition and the Evolution of Zombie Banks by : César Calderón
Download or read book The Effects of Government Interventions in the Financial Sector on Banking Competition and the Evolution of Zombie Banks written by César Calderón and published by . This book was released on 2014 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate how government interventions such as blanket guarantees, liquidity support, recapitalizations, and nationalizations affect banking competition. This issue is critical for stability, access to finance, and economic growth. Exploiting cross-country and cross-time variation in the timing of interventions and accounting for their non-randomness, we document that liquidity support, recapitalizations, and nationalizations trigger large increases in competition. We also find some more nuanced evidence that zombie banks' market shares in crisis countries evolve together with interventions. A higher frequency of interventions coincides with greater zombie bank presence, and increases in competition are larger when zombie banks occupy bigger market shares.
Book Synopsis A New Measure of Competition in the Financial Industry by : Jacob A. Bikker
Download or read book A New Measure of Competition in the Financial Industry written by Jacob A. Bikker and published by . This book was released on 2015 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The 2008 credit crisis started with the failure of one large bank: Lehman Brothers. Since then the focus of both politicians and regulators has been on stabilising the economy and preventing future financial instability. At this juncture, we are at the last stage of future-proofing the financial sector by raising capital requirements and tightening financial regulation. Now the policy agenda needs to concentrate on transforming the banking sector into an engine for growth. Reviving competition in the banking sector after the state interventions of the past years is a key step in this process. This book introduces and explains a relatively new concept in competition measurement: the performance-conduct-structure (PCS) indicator. The key idea behind this measure is that a firm's efficiency is more highly rewarded in terms of market share and profit, the stronger competitive pressure is. The book begins by explaining the financial market's fundamental obstacles to competition presenting a brief survey of the complex relationship between financial stability and competition. The theoretical contributions of Hay and Liu and Boone provide the theoretical underpinning for the PCS indicator, while its application to banking and insurance illustrates its empirical qualities. Finally, this book presents a systematic comparison between the results of this approach and (all) existing methods as applied to 46 countries, over the same sample period. This book presents a comprehensive overview of the knowns and unknowns of financial sector competition for commercial and central bankers, policy-makers, supervisors and academics alike.
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.
Book Synopsis Financial Dependence, Banking Sector Competition, and Economic Growth by : Stijn Claessens
Download or read book Financial Dependence, Banking Sector Competition, and Economic Growth written by Stijn Claessens and published by World Bank Publications. This book was released on 2005 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The relationships among competition in the financial sector, access of firms to external financing, and associated economic growth are ambiguous in theory. Moreover, measuring competition in the financial sector can be complex. In this paper Claessens and Laeven first estimate for 16 countries a measure of banking system competition based on industrial organization theory. They then relate this competition measure to growth of industries and find that greater competition in countries' banking systems allows financially dependent industries to grow faster. These results are robust under a variety of tests. The results suggest that the degree of competition is an important aspect of financial sector funding. This paper--a product of the Financial Sector Operations and Policy Department--is part of a larger effort in the department to study competition in banking"--World Bank web site.
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.
