The digital economy's rise has fueled the growth of digital banking, but concerns linger about customer protection. While offering advantages like financial inclusion, this shift disrupts traditional banking experiences and introduces potential risks. Customer safety in this new landscape is...

We develop an analysis of ex ante monitoring of risky projects in banking. If protected from competition, banks are more concerned about not catching good risk projects when the perceived state of the economy improves, while they are more concerned about being induced to finance bad risk...