This unique study examines the interactive role of bank competition and foreign bank entry in explaining the risk … stability. Furthermore, the joint effect of bank competition and foreign bank entry brings financial fragility because host … banks tend to make risky investments due to undue competition induced by foreign bank entry. We support the competition …

, thereby leading to lower rents for banks and greater competition in the domestic banking sector. We also predict that banks …-side (i.e., banks not willing to lend to firms). Overall, we document how competition from overseas financial markets …