Does Competition Reduce the Risk of Bank Failure?

• 成果类型: Article
• 署名作者: Martinez-Miera, David; Repullo, Rafael
• 署名单位: Universidad Carlos III de Madrid
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhq057
• 发表日期: 2010
• 页码: 3638
• 关键词: Capital requirements; market power

摘要

A large theoretical literature shows that competition reduces banks' franchise values and induces them to take more risk. Recent research contradicts this result: When banks charge lower rates, their borrowers have an incentive to choose safer investments, so they will in turn be safer. However, this argument does not take into account the fact that lower rates also reduce the banks' revenues from performing loans. This paper shows that when this effect is taken into account, a U-shaped relationship between competition and the risk of bank failure generally obtains.