Banking Competition and Capital Ratios
AbstractWe 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.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 07/216.
Date of creation: 01 Sep 2007
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-11-03 (All new papers)
- NEP-BAN-2007-11-03 (Banking)
- NEP-COM-2007-11-03 (Industrial Competition)
- NEP-CSE-2007-11-03 (Economics of Strategic Management)
- NEP-EEC-2007-11-03 (European Economics)
- NEP-EFF-2007-11-03 (Efficiency & Productivity)
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