By Jacob A Bikker, Michiel van Leuvensteijn
The 2008 credits drawback began with the failure of 1 huge financial institution: Lehman Brothers. in view that then the focal point of either politicians and regulators has been on stabilising the economic climate and combating destiny monetary instability. At this juncture, we're on the final degree of future-proofing the monetary zone by means of elevating capital specifications and tightening monetary legislation. Now the coverage schedule must be aware of reworking the banking area into an engine for development. Reviving festival within the banking quarter after the nation interventions of the previous years is a key step during this process.
This publication introduces and explains a comparatively new idea in pageant dimension: the performance-conduct-structure (PCS) indicator. the main concept at the back of this degree is firm’s potency is extra hugely rewarded by way of marketplace percentage and revenue, the more desirable aggressive strain is. The publication starts by way of explaining the monetary market’s basic stumbling blocks to pageant offering a quick survey of the complicated dating among monetary balance and festival. The theoretical contributions of Hay and Liu and Boone give you the theoretical underpinning for the computers indicator, whereas its program to banking and coverage illustrates its empirical features. eventually, this publication provides a scientific comparability among the result of this process and (all) latest equipment as utilized to forty six nations, over an analogous pattern interval.
This ebook provides a complete evaluation of the knowns and unknowns of monetary zone festival for advertisement and valuable bankers, policy-makers, supervisors and teachers alike.
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Additional info for A New Measure of Competition in the Financial Industry: The Performance-Conduct-Structure Indicator
It seems likely that only a part of the population is susceptible to such efforts. 13 Heterogeneity is another structural weakness that can be addressed. A possible step forward is to promote more homogeneous or standardized products. A good example was set by the FSA in the UK, which a number of years ago provided a detailed definition of a normalized private pension plan. It also launched and maintains a website listing prices of the financial institutions offering such 16â•… Jacob A. Bikker and Michiel van Leuvensteijn prescribed pension products.
M. Cihák and S. , Journal of Money, Credit and Banking 41, 711–734. Summers, L. v=KYpVzBbQIX0. , D. Fazio and D. Cajueiro (2012) The relationship between banking market competition and risk-taking: Do size and capitalization matter? Journal of Banking and Finance 36 (12), 3366–3381. M. M. Prast (2007) Risk-return preferences in the pension domain: are people able to choose? Journal of Public Economics 91, 701–722. Wagner, W. (2010) Diversification at financial institutions and systemic crises, Journal of Financial Intermediation 19, 373–386.
Banks may enjoy higher franchise value derived from this market power, the owners of the bank have an incentive to protect this franchise value from the higher risk of the loan portfolio and are willing to increase equity capital or take other risk-mitigating measures (Berger, Klapper and Turk-Ariss, 2009). g. Mishkin, 1999). Having larger banks in a concentrated banking system could also increase the risk of contagion, resulting in a positive impact of concentration (and thus less competition) on systemic fragility.
A New Measure of Competition in the Financial Industry: The Performance-Conduct-Structure Indicator by Jacob A Bikker, Michiel van Leuvensteijn