How Does Bank Competition Affect Systemic Stability?
Using bank level measures of competition and co-dependence, the authors show a robust positive relationship between bank competition and systemic stability. Whereas much of the extant literature has focused on the relationship between competition a...
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| Format: | Policy Research Working Paper |
| Language: | English |
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2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120229120053 http://hdl.handle.net/10986/3267 |
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okr-10986-3267 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCESS TO FINANCIAL SERVICES ACCOUNTING ADVERSE EFFECT AMOUNT OF CAPITAL ASSET DIVERSIFICATION ASSET PRICE ASSET PRICES ASSET VALUE ASSET VALUES ASSETS RATIO AUSTRIAN NATIONAL BANK BALANCE SHEET BANK ACTIVITIES BANK ASSET BANK ASSETS BANK CAPITAL BANK COMPETITION BANK CREDIT BANK ENTRY BANK HOLDING BANK HOLDING COMPANIES BANK INVESTORS BANK MARKET BANK POLICY BANK PROFITABILITY BANK REGULATION BANK RISK BANK RISK TAKING BANK RUNS BANK SUPERVISION BANKING ASSETS BANKING CONCENTRATION BANKING CRISIS BANKING INDUSTRIES BANKING SECTOR BANKING STRUCTURE BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BANKS BOOK VALUE BORROWING BUSINESS CYCLE CALL OPTION CAPITAL REGULATION CAPITAL REQUIREMENTS CAPITALIZATION CDS CHANNELS OF CREDIT CHECKS COMMERCIAL BANKS COMPETITION POLICIES COMPETITION POLICY COMPETITIVE MARKETS CONNECTIVITY CORPORATE DEBT COUNTRY FIXED EFFECT COUNTRY FIXED EFFECTS CREDIT ALLOCATION CREDIT CRUNCH CREDIT INFORMATION CREDIT MARKET CREDIT MARKETS CREDIT RISK DEBT DEFAULT PROBABILITIES DEFAULT PROBABILITY DEFAULT RISK DEFAULT RISKS DEPOSIT DEPOSIT INSURANCE DEPOSIT INSURANCE COVERAGE DEPOSIT MONEY BANKS DEPOSITS DEREGULATION DIVIDEND DIVIDEND RATE DUMMY VARIABLE ECONOMIC DEVELOPMENT ECONOMIC STABILITY ECONOMICS EMERGING MARKETS ENTRY BARRIERS ENTRY REQUIREMENTS EQUITY RETURNS EQUITY VALUE EXCLUSION EXIT POLICIES EXPOSURE EXPOSURE TO RISK FACE VALUE FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF NEW YORK FEE INCOME FINANCIAL CONTAGION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL FRAGILITY FINANCIAL INFORMATION FINANCIAL INNOVATIONS FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL POLICY FINANCIAL PRODUCTS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL STRUCTURE FINANCIAL STUDIES FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN BANK FOREIGN ENTRY FOREIGN INVESTORS FOREIGN OWNERSHIP FOREIGN OWNERSHIP OF BANKS GLOBAL BANKING GLOBAL BUSINESS GLOBAL MARKET GLOBAL STOCK MARKET GLOBALIZATION GOVERNMENT OWNERSHIP GOVERNMENT OWNERSHIP OF BANKS GOVERNMENT POLICIES GROUP OF BANK GROWTH RATE IMPLICIT GUARANTEE INFORMATION ASYMMETRY INFORMATION ON BORROWERS INFORMATION SHARING INPUT PRICES INSTITUTIONAL ENVIRONMENT INTEREST EXPENSES INTEREST INCOME INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKS INTERNATIONAL FINANCIAL SYSTEM INTERPOLATION INVESTOR PROTECTION LACK OF COMPETITION LEVEL OF RISK LEVELS OF CREDIT LIBERALIZATION LIQUIDITY LOAN LOAN DEFAULTS LOAN LOSS PROVISIONS LOAN MARKET LOW ENTRY BARRIER MARGINAL COST MARKET COMPETITION MARKET DISCIPLINE MARKET EQUITY MARKET INFORMATION MARKET INTEGRATION MARKET LIQUIDITY MARKET VALUE MONEY MARKET MORAL HAZARD NEW MARKETS OPERATING EXPENSES OPERATING INCOME OUTPUT PERSONNEL EXPENSES PORTFOLIOS PRIVATE BANKS PRIVATE CREDIT PRIVATE SECTOR DEVELOPMENT PROBABILITY OF DEFAULT PROFITABILITY PROFITABILITY MEASURES PRUDENTIAL REGULATION PUBLIC POLICIES PUBLIC POLICY REAL ESTATE REGULATORS REGULATORY AUTHORITIES REGULATORY ENVIRONMENT REGULATORY FRAMEWORK RETURN RETURN ON ASSETS RISK DIVERSIFICATION RISK OF BANK FAILURE RISK SHARING RISK TAKING SAFETY NET SAFETY NETS SECURITIES SHARE OF ASSETS SHAREHOLDER SMALL BANKS SOURCES OF CREDIT STATE GUARANTEES STOCK MARKET STOCK MARKET CAPITALIZATION STOCK MARKETS STOCK PRICE STOCK RETURN SUPERVISORY AUTHORITIES SUPERVISORY POWER SUPERVISORY POWERS SUPERVISORY POWER SYNCHRONOUS STOCK PRICE MOVEMENTS SYSTEMIC BANKING CRISES SYSTEMIC RISK TRADING TRADING INCOME TREASURY TREASURY YIELD VALUE OF ASSETS VOLATILITY |
| spellingShingle |
ACCESS TO FINANCIAL SERVICES ACCOUNTING ADVERSE EFFECT AMOUNT OF CAPITAL ASSET DIVERSIFICATION ASSET PRICE ASSET PRICES ASSET VALUE ASSET VALUES ASSETS RATIO AUSTRIAN NATIONAL BANK BALANCE SHEET BANK ACTIVITIES BANK ASSET BANK ASSETS BANK CAPITAL BANK COMPETITION BANK CREDIT BANK ENTRY BANK HOLDING BANK HOLDING COMPANIES BANK INVESTORS BANK MARKET BANK POLICY BANK PROFITABILITY BANK REGULATION BANK RISK BANK RISK TAKING BANK RUNS BANK SUPERVISION BANKING ASSETS BANKING CONCENTRATION BANKING CRISIS BANKING INDUSTRIES BANKING SECTOR BANKING STRUCTURE BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BANKS BOOK VALUE BORROWING BUSINESS CYCLE CALL OPTION CAPITAL REGULATION CAPITAL REQUIREMENTS CAPITALIZATION CDS CHANNELS OF CREDIT CHECKS COMMERCIAL BANKS COMPETITION POLICIES COMPETITION POLICY COMPETITIVE MARKETS CONNECTIVITY CORPORATE DEBT COUNTRY FIXED EFFECT COUNTRY FIXED EFFECTS CREDIT ALLOCATION CREDIT CRUNCH CREDIT INFORMATION CREDIT MARKET CREDIT MARKETS CREDIT RISK DEBT DEFAULT PROBABILITIES DEFAULT PROBABILITY DEFAULT RISK DEFAULT RISKS DEPOSIT DEPOSIT INSURANCE DEPOSIT INSURANCE COVERAGE DEPOSIT MONEY BANKS DEPOSITS DEREGULATION DIVIDEND DIVIDEND RATE DUMMY VARIABLE ECONOMIC DEVELOPMENT ECONOMIC STABILITY ECONOMICS EMERGING MARKETS ENTRY BARRIERS ENTRY REQUIREMENTS EQUITY RETURNS EQUITY VALUE EXCLUSION EXIT POLICIES EXPOSURE EXPOSURE TO RISK FACE VALUE FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF NEW YORK FEE INCOME FINANCIAL CONTAGION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL FRAGILITY FINANCIAL INFORMATION FINANCIAL INNOVATIONS FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL POLICY FINANCIAL PRODUCTS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL STRUCTURE FINANCIAL STUDIES FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN BANK FOREIGN ENTRY FOREIGN INVESTORS FOREIGN OWNERSHIP FOREIGN OWNERSHIP OF BANKS GLOBAL BANKING GLOBAL BUSINESS GLOBAL MARKET GLOBAL STOCK MARKET GLOBALIZATION GOVERNMENT OWNERSHIP GOVERNMENT OWNERSHIP OF BANKS GOVERNMENT POLICIES GROUP OF BANK GROWTH RATE IMPLICIT GUARANTEE INFORMATION ASYMMETRY INFORMATION ON BORROWERS INFORMATION SHARING INPUT PRICES INSTITUTIONAL ENVIRONMENT INTEREST EXPENSES INTEREST INCOME INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKS INTERNATIONAL FINANCIAL SYSTEM INTERPOLATION INVESTOR PROTECTION LACK OF COMPETITION LEVEL OF RISK LEVELS OF CREDIT LIBERALIZATION LIQUIDITY LOAN LOAN DEFAULTS LOAN LOSS PROVISIONS LOAN MARKET LOW ENTRY BARRIER MARGINAL COST MARKET COMPETITION MARKET DISCIPLINE MARKET EQUITY MARKET INFORMATION MARKET INTEGRATION MARKET LIQUIDITY MARKET VALUE MONEY MARKET MORAL HAZARD NEW MARKETS OPERATING EXPENSES OPERATING INCOME OUTPUT PERSONNEL EXPENSES PORTFOLIOS PRIVATE BANKS PRIVATE CREDIT PRIVATE SECTOR DEVELOPMENT PROBABILITY OF DEFAULT PROFITABILITY PROFITABILITY MEASURES PRUDENTIAL REGULATION PUBLIC POLICIES PUBLIC POLICY REAL ESTATE REGULATORS REGULATORY AUTHORITIES REGULATORY ENVIRONMENT REGULATORY FRAMEWORK RETURN RETURN ON ASSETS RISK DIVERSIFICATION RISK OF BANK FAILURE RISK SHARING RISK TAKING SAFETY NET SAFETY NETS SECURITIES SHARE OF ASSETS SHAREHOLDER SMALL BANKS SOURCES OF CREDIT STATE GUARANTEES STOCK MARKET STOCK MARKET CAPITALIZATION STOCK MARKETS STOCK PRICE STOCK RETURN SUPERVISORY AUTHORITIES SUPERVISORY POWER SUPERVISORY POWERS SUPERVISORY POWER SYNCHRONOUS STOCK PRICE MOVEMENTS SYSTEMIC BANKING CRISES SYSTEMIC RISK TRADING TRADING INCOME TREASURY TREASURY YIELD VALUE OF ASSETS VOLATILITY Anginer, Deniz Demirguc-Kunt, Asli Zhu, Min How Does Bank Competition Affect Systemic Stability? |
| geographic_facet |
The World Region |
| relation |
Policy Research working paper ; no. WPS 5981 |
| description |
Using bank level measures of competition
and co-dependence, the authors show a robust positive
relationship between bank competition and systemic
stability. Whereas much of the extant literature has focused
on the relationship between competition and the absolute
level of risk of individual banks, they examine the
correlation in the risk taking behavior of banks, hence
systemic risk. They find that greater competition encourages
banks to take on more diversified risks, making the banking
system less fragile to shocks. Examining the impact of the
institutional and regulatory environment on systemic
stability shows that banking systems are more fragile in
countries with weak supervision and private monitoring, with
generous deposit insurance and greater government ownership
of banks, and public policies that restrict competition.
Furthermore, lack of competition has a greater adverse
effect on systemic stability in countries with low levels of
foreign ownership, weak investor protections, generous
safety nets, and where the authorities provide limited
guidance for bank asset diversification. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Anginer, Deniz Demirguc-Kunt, Asli Zhu, Min |
| author_facet |
Anginer, Deniz Demirguc-Kunt, Asli Zhu, Min |
| author_sort |
Anginer, Deniz |
| title |
How Does Bank Competition Affect Systemic Stability? |
| title_short |
How Does Bank Competition Affect Systemic Stability? |
| title_full |
How Does Bank Competition Affect Systemic Stability? |
| title_fullStr |
How Does Bank Competition Affect Systemic Stability? |
| title_full_unstemmed |
How Does Bank Competition Affect Systemic Stability? |
| title_sort |
how does bank competition affect systemic stability? |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120229120053 http://hdl.handle.net/10986/3267 |
| _version_ |
1764386705973968896 |
| spelling |
okr-10986-32672021-04-23T14:02:08Z How Does Bank Competition Affect Systemic Stability? Anginer, Deniz Demirguc-Kunt, Asli Zhu, Min ACCESS TO FINANCIAL SERVICES ACCOUNTING ADVERSE EFFECT AMOUNT OF CAPITAL ASSET DIVERSIFICATION ASSET PRICE ASSET PRICES ASSET VALUE ASSET VALUES ASSETS RATIO AUSTRIAN NATIONAL BANK BALANCE SHEET BANK ACTIVITIES BANK ASSET BANK ASSETS BANK CAPITAL BANK COMPETITION BANK CREDIT BANK ENTRY BANK HOLDING BANK HOLDING COMPANIES BANK INVESTORS BANK MARKET BANK POLICY BANK PROFITABILITY BANK REGULATION BANK RISK BANK RISK TAKING BANK RUNS BANK SUPERVISION BANKING ASSETS BANKING CONCENTRATION BANKING CRISIS BANKING INDUSTRIES BANKING SECTOR BANKING STRUCTURE BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BANKS BOOK VALUE BORROWING BUSINESS CYCLE CALL OPTION CAPITAL REGULATION CAPITAL REQUIREMENTS CAPITALIZATION CDS CHANNELS OF CREDIT CHECKS COMMERCIAL BANKS COMPETITION POLICIES COMPETITION POLICY COMPETITIVE MARKETS CONNECTIVITY CORPORATE DEBT COUNTRY FIXED EFFECT COUNTRY FIXED EFFECTS CREDIT ALLOCATION CREDIT CRUNCH CREDIT INFORMATION CREDIT MARKET CREDIT MARKETS CREDIT RISK DEBT DEFAULT PROBABILITIES DEFAULT PROBABILITY DEFAULT RISK DEFAULT RISKS DEPOSIT DEPOSIT INSURANCE DEPOSIT INSURANCE COVERAGE DEPOSIT MONEY BANKS DEPOSITS DEREGULATION DIVIDEND DIVIDEND RATE DUMMY VARIABLE ECONOMIC DEVELOPMENT ECONOMIC STABILITY ECONOMICS EMERGING MARKETS ENTRY BARRIERS ENTRY REQUIREMENTS EQUITY RETURNS EQUITY VALUE EXCLUSION EXIT POLICIES EXPOSURE EXPOSURE TO RISK FACE VALUE FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF NEW YORK FEE INCOME FINANCIAL CONTAGION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL FRAGILITY FINANCIAL INFORMATION FINANCIAL INNOVATIONS FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL POLICY FINANCIAL PRODUCTS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL STRUCTURE FINANCIAL STUDIES FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN BANK FOREIGN ENTRY FOREIGN INVESTORS FOREIGN OWNERSHIP FOREIGN OWNERSHIP OF BANKS GLOBAL BANKING GLOBAL BUSINESS GLOBAL MARKET GLOBAL STOCK MARKET GLOBALIZATION GOVERNMENT OWNERSHIP GOVERNMENT OWNERSHIP OF BANKS GOVERNMENT POLICIES GROUP OF BANK GROWTH RATE IMPLICIT GUARANTEE INFORMATION ASYMMETRY INFORMATION ON BORROWERS INFORMATION SHARING INPUT PRICES INSTITUTIONAL ENVIRONMENT INTEREST EXPENSES INTEREST INCOME INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKS INTERNATIONAL FINANCIAL SYSTEM INTERPOLATION INVESTOR PROTECTION LACK OF COMPETITION LEVEL OF RISK LEVELS OF CREDIT LIBERALIZATION LIQUIDITY LOAN LOAN DEFAULTS LOAN LOSS PROVISIONS LOAN MARKET LOW ENTRY BARRIER MARGINAL COST MARKET COMPETITION MARKET DISCIPLINE MARKET EQUITY MARKET INFORMATION MARKET INTEGRATION MARKET LIQUIDITY MARKET VALUE MONEY MARKET MORAL HAZARD NEW MARKETS OPERATING EXPENSES OPERATING INCOME OUTPUT PERSONNEL EXPENSES PORTFOLIOS PRIVATE BANKS PRIVATE CREDIT PRIVATE SECTOR DEVELOPMENT PROBABILITY OF DEFAULT PROFITABILITY PROFITABILITY MEASURES PRUDENTIAL REGULATION PUBLIC POLICIES PUBLIC POLICY REAL ESTATE REGULATORS REGULATORY AUTHORITIES REGULATORY ENVIRONMENT REGULATORY FRAMEWORK RETURN RETURN ON ASSETS RISK DIVERSIFICATION RISK OF BANK FAILURE RISK SHARING RISK TAKING SAFETY NET SAFETY NETS SECURITIES SHARE OF ASSETS SHAREHOLDER SMALL BANKS SOURCES OF CREDIT STATE GUARANTEES STOCK MARKET STOCK MARKET CAPITALIZATION STOCK MARKETS STOCK PRICE STOCK RETURN SUPERVISORY AUTHORITIES SUPERVISORY POWER SUPERVISORY POWERS SUPERVISORY POWER SYNCHRONOUS STOCK PRICE MOVEMENTS SYSTEMIC BANKING CRISES SYSTEMIC RISK TRADING TRADING INCOME TREASURY TREASURY YIELD VALUE OF ASSETS VOLATILITY Using bank level measures of competition and co-dependence, the authors show a robust positive relationship between bank competition and systemic stability. Whereas much of the extant literature has focused on the relationship between competition and the absolute level of risk of individual banks, they examine the correlation in the risk taking behavior of banks, hence systemic risk. They find that greater competition encourages banks to take on more diversified risks, making the banking system less fragile to shocks. Examining the impact of the institutional and regulatory environment on systemic stability shows that banking systems are more fragile in countries with weak supervision and private monitoring, with generous deposit insurance and greater government ownership of banks, and public policies that restrict competition. Furthermore, lack of competition has a greater adverse effect on systemic stability in countries with low levels of foreign ownership, weak investor protections, generous safety nets, and where the authorities provide limited guidance for bank asset diversification. 2012-03-19T17:29:25Z 2012-03-19T17:29:25Z 2012-02-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120229120053 http://hdl.handle.net/10986/3267 English Policy Research working paper ; no. WPS 5981 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region |