Banking Competition and Capital Ratios
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Summary:
We use data for more than 2,600 European banks to test whether increased competition causes banks to hold higher capital ratios. Employing panel data techniques, and distinguishing between the competitive conduct of small and large banks, we show that banks tend to hold higher capital ratios when operating in a more competitive environment. This result holds when controlling for the degree of concentration in banking systems, inter-industry competition, characteristics of the wider financial system, and the regulatory and institutional environment.
Series:
Working Paper No. 2007/216
Subject:
Bank soundness Banking Capital adequacy requirements Commercial banks Competition Deposit insurance Financial institutions Financial markets Financial regulation and supervision Financial sector policy and analysis Loan loss provisions
English
Publication Date:
September 1, 2007
ISBN/ISSN:
9781451867800/1018-5941
Stock No:
WPIEA2007216
Pages:
40
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