We assess the influence of competition and capital regulation on the stability of the banking system. We particularly … show that competition improves the monitoring incentives of better quality banks and deteriorates the incentives of lower … quality banks; and that precisely for those lower quality banks competition typically compromises the effectiveness of capital …

This paper studies regulatory competition in the banking sector in a model where banks are heterogeneous and taxpayers … strictly regulated country. In this model, regulatory competition in capital standards may lead to a `race to the top' for two …

III rules, thus suggesting a "race to the top" in capital standards. We study regulatory competition when banks are …

III rules, thus suggesting a 'race to the top' in capital standards. We study regulatory competition when banks are …