NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

Does Competition Affect Bank Risk?

Liangliang Jiang, Ross Levine, Chen Lin

NBER Working Paper No. 23080
Issued in January 2017
NBER Program(s):Corporate Finance, Industrial Organization

Although policymakers often discuss tradeoffs between bank competition and stability, past research provides differing theoretical perspectives and empirical results on the impact of competition on risk. In this paper, we employ a new approach for identifying exogenous changes in the competitive pressures facing individual banks and discover that an intensification of competition materially boosts bank risk. With respect to the mechanisms, we find that competition reduces bank profits, charter values, and relationship lending and increases banks’ provision of nontraditional banking services.

download in pdf format
   (624 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w23080

Users who downloaded this paper also downloaded* these:
Jiang, Levine, and Lin w22195 Competition and Bank Liquidity Creation
Jiang, Levine, and Lin w20760 Competition and Bank Opacity
Levine, Lin, and Xie w22544 Geographic Diversification and Banks’ Funding Costs
Chousakos and Gorton w23167 Bank Health Post-Crisis
Shiller, Waldfogel, and Ryan w23058 Will Ad Blocking Break the Internet?
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us