Keywords
competition intensity, financial stability of bankbank risk
Abstract
The article aims to determine what the potential relationships are between competition and the financial stability of banks. To resolve this problem, theoretical and empirical evidence is assessed. The analysis leads to the conclusion that high intensity of competition results in greater risk-taking by banks in the deposit market. By contrast, in the lean market, the more competitive the market is, the more risks banks take (and the greater their instability). However, most recent research, both theoretical and empirical, suggests that the relationship between competition and financial stability is non-linear, as both high and low intensity of competition bring about financial instability. The analysis of empirical evidence indicates that the strength and direction of the relationship between competition and financial stability depends on bank size, bank capita level as well as the macroeconomic environment
Recommended Citation
Olszak, M. (2014). Competition in the banking sector and financial stability – a review of theoretical and empirical evidence. internetowy Kwartalnik Antymonopolowy i Regulacyjny (internet Quarterly on Antitrust and Regulation), 3(5), 8-34. Retrieved from https://press.wz.uw.edu.pl/ikar/vol3/iss5/1
First Page
8
Last Page
34
Page Count
26
Publisher
University of Warsaw
