Bank Competition: Measurement, Decision-Making, and Risk-Taking

• 成果类型: Article
• 署名作者: Bushman, Robert M.; Hendricks, Bradley E.; Williams, Christopher D.
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; University of Michigan System; University of Michigan
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12117
• 发表日期: 2016
• 页码: 777-826
• 关键词: impact

摘要

This paper investigates whether greater competition increases or decreases individual bank and banking system risk. Using a new text-based measure of competition, and an instrumental variables analysis that exploits exogenous variation in bank deregulation, we provide robust evidence that greater competition increases both individual bank risk and a bank's contribution to system-wide risk. Specifically, we find that higher competition is associated with lower underwriting standards, less timely loan loss recognition, and a shift toward noninterest revenue. Further, we find that higher competition is associated with higher stand-alone risk of individual banks, greater sensitivity of a bank's downside equity risk to system-wide distress, and a greater contribution by individual banks to downside risk of the banking sector.