A growing body of literature indicates that competition increases bank soundness. Applying an industrial organization … bank soundness. We find evidence that competition robustly increases bank soundness, via the efficiency channel … role in the transmission from competition to soundness. We use a twopronged approach. First, we employ Granger causality …

approach is able to measure competition of bank market segments, such as the loan market, whereas many well-known measures of … ignores differences in bank product quality and design, as well as the attractiveness of innovations. We measure competition …This paper is the first that applies a new measure of competition, the Boone indicator, to the banking industry. This …