Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/147991
Authors: 
Goetz, Martin
Year of Publication: 
2016
Series/Report no.: 
CFS Working Paper Series No. 559
Abstract: 
Does an increase in competition increase or decrease bank stability? I exploit how the state-specific process of interstate banking deregulation lowered barriers to entry into urban banking markets and find that greater competition significantly increases bank stability. This result is robust to the inclusion of additional fixed effects and other influences, such as merger and acquisitions or diversification. Moreover, I find that greater competition reduces banks' nonperforming loans and increases bank profitability. These findings suggest that competition increases stability as it improves bank profitability and asset quality.
Subjects: 
Risk
Stability
Competition
Contestability
Entry
Bank Deregulation
Lending
JEL: 
G21
G28
G32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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