Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/264940 
Year of Publication: 
2021
Series/Report no.: 
Working Paper No. 19/2021
Publisher: 
Norges Bank, Oslo
Abstract: 
We use unique data on banks' private risk assessments of corporate borrowers to quantify how competition among banks affect the risk sensitivity of interest rates in the Norwegian credit market. We show that an increase in competition makes corporate lending rates less sensitive to banks' own assessment of borrower risk and this is more pronounced in market segments with higher degree of asymmetric information. Our results are driven by banks with low franchise values, outlining a novel channel of how the competition-fragility nexus can operate.
Subjects: 
Banking competition
market power
risk pricing
financial stability
JEL: 
G11
G21
G28
Persistent Identifier of the first edition: 
ISBN: 
978-82-8379-218-8
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper
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