Cover IMF Working Papers
Banking Competition and Capital Ratios
Author: Mr. Martin Cihakhttps://orcid.org/0000-0002-3571-9707 and Mr. Klaus Schaeck
Series:
IMF Working Papers
Volume/Issue:
Volume 2007: Issue 216
Language:
English
Publication Date:
01 Sep 2007
DOI:
https://doi.org/10.5089/9781451867800.001
ISBN:
9781451867800
ISSN:
1018-5941
Pages:
40
Keywords:
WP; capital adequacy ratio; market share; banking system; asset growth; bank performance; dependent variable; Bank capital ratios; competition; market structure; regulation; i. output; bank capital; bank-year observation; bank ownership structure; bank competition; bank risk; output of bank; banks' capital ratios; bank i.; banking industry; Capital adequacy requirements; Commercial banks; Bank soundness; Loan loss provisions; Europe
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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We 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.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund