One of the most relevant discussions on bank regulation is the dichotomy between liberalization, with higher competition, and financial stability. To investigate this problem, the article examines competitive conditions and risk taking in Brazilian banks, and investigates their interrelationship. Competition is measured using Panzar & Rosse model and risk taking by Basel Brazilian Index. Given the relevance of the discussion between Allen & Gale, Grochulski & Kareken and Kahn a measure of concentration was used as a proxy for competition. It is shown that Brazilian banks operate in monopolist competition and that competition increases risk taking. However, competition is not significance to explain credit offer.
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Length: Date of creation: 2005 Date of revision: Handle: RePEc:anp:en2005:042
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Find related papers by JEL classification: D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
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