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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/39006
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| Title: | | Competition and stability in banking  |
| Authors: | | Vives, Xavier |
| Issue Date: | | 2010 |
| Series/Report no.: | | CESifo working paper Trade Policy 3050 |
| Abstract: | | I review the state of the art of the academic theoretical and empirical literature on the potential trade-off between competition and stability in banking. There are two basic channels through which competition may increase instability: by exacerbating the coordination problem of depositors/investors on the liability side and fostering runs/panics, and by increasing incentives to take risk and raise failure probabilities. The competition-stability trade-off is characterized and the implications of the analysis for regulation and competition policy are derived. It is found that optimal regulation may depend on the intensity of competition. |
| Subjects: | | antitrust regulation crisis risk-taking mergers state aid bail-outs |
| JEL: | | G21 G28 L40 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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