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Should competition policy in banking be amended during crises? Lessons from the EU

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  • Hasan, Iftekhar

    ()
    (Fordham University and Bank of Finland)

  • Marinc , Matej

    ()
    (University of Ljubljana and ACLE)

Abstract

This article investigates the nexus of competition and stability in European banking. It analyzes the European legal framework for competition policy in banking and several cases that pertain to anti-cartel policy, merger policy, and state-aid control. It discusses whether and how competition policy should be amended in order to preserve the stability of the banking system during crises. The article argues for increased cooperation between prudential regulators and competition authorities, as well as an enhanced framework for bank regulation, supervision, and resolution that could mitigate the need to change competition policy in crisis times.

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File URL: http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/BoF_DP_1307.pdf
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Bibliographic Info

Paper provided by Bank of Finland in its series Research Discussion Papers with number 7/2013.

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Length: 35 pages
Date of creation: 19 May 2013
Date of revision:
Publication status: Forthcoming as Hasan, Iftekhar and Matej Marinc, 'Should competition policy in banking be amended during crises? Lessons from the EU' in European Journal of Law and Economics .
Handle: RePEc:hhs:bofrdp:2013_007

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Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
Web page: http://www.suomenpankki.fi/en/
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Keywords: banking; competition policy; financial crisis;

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  1. Craig O. Brown & I. Serdar Dinç, 2005. "The Politics of Bank Failures: Evidence from Emerging Markets," The Quarterly Journal of Economics, MIT Press, vol. 120(4), pages 1413-1444, November.
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  4. Berger, Allen N. & Klapper, Leora F. & Turk-Ariss, Rima, 2008. "Bank competition and financial stability," Policy Research Working Paper Series 4696, The World Bank.
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  9. Stijn Claessens, 2009. "Competition in the Financial Sector: Overview of Competition Policies," World Bank Research Observer, World Bank Group, vol. 24(1), pages 83-118, April.
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  13. John H. Boyd & Gianni De Nicolã, 2005. "The Theory of Bank Risk Taking and Competition Revisited," Journal of Finance, American Finance Association, vol. 60(3), pages 1329-1343, 06.
  14. Boot, Arnoud W A & Thakor, Anjan, 1997. "Can Relationship Banking Survive Competition?," CEPR Discussion Papers 1592, C.E.P.R. Discussion Papers.
  15. Roberto Chang & Andrés Velasco, 2001. "A Model Of Financial Crises In Emerging Markets," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 489-517, May.
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