Bank Risk-Taking and Competition Revisited:
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 bri...
Gespeichert in:
1. Verfasser: | |
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Format: | Elektronisch E-Book |
Sprache: | English |
Veröffentlicht: |
Washington, D.C
International Monetary Fund
2003
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Schriftenreihe: | IMF Working Papers
Working Paper No. 03/114 |
Online-Zugang: | UBW01 UEI01 LCO01 SBR01 UER01 SBG01 UBG01 FAN01 UBT01 FKE01 UBY01 UBA01 FLA01 UBM01 UPA01 UBR01 FHA01 FNU01 BSB01 TUM01 Volltext |
Zusammenfassung: | 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 |
Beschreibung: | 1 Online-Ressource (24 p) |
ISBN: | 1451853815 9781451853810 |
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illustrated | Not Illustrated |
index_date | 2024-07-03T20:13:29Z |
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publisher | International Monetary Fund |
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spelling | De Nicoló, Gianni Verfasser aut Bank Risk-Taking and Competition Revisited De Nicoló, Gianni Washington, D.C International Monetary Fund 2003 1 Online-Ressource (24 p) txt rdacontent c rdamedia cr rdacarrier IMF Working Papers Working Paper No. 03/114 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 Online-Ausg Boyd, John H. Sonstige oth http://elibrary.imf.org/view/IMF001/00628-9781451853810/00628-9781451853810/00628-9781451853810.xml Verlag URL des Erstveröffentlichers Volltext |
spellingShingle | De Nicoló, Gianni Bank Risk-Taking and Competition Revisited |
title | Bank Risk-Taking and Competition Revisited |
title_auth | Bank Risk-Taking and Competition Revisited |
title_exact_search | Bank Risk-Taking and Competition Revisited |
title_exact_search_txtP | Bank Risk-Taking and Competition Revisited |
title_full | Bank Risk-Taking and Competition Revisited De Nicoló, Gianni |
title_fullStr | Bank Risk-Taking and Competition Revisited De Nicoló, Gianni |
title_full_unstemmed | Bank Risk-Taking and Competition Revisited De Nicoló, Gianni |
title_short | Bank Risk-Taking and Competition Revisited |
title_sort | bank risk taking and competition revisited |
url | http://elibrary.imf.org/view/IMF001/00628-9781451853810/00628-9781451853810/00628-9781451853810.xml |
work_keys_str_mv | AT denicologianni bankrisktakingandcompetitionrevisited AT boydjohnh bankrisktakingandcompetitionrevisited |