We study a simple general equilibrium model in which investment in a risky technology is subject to moral hazard and banks can extract market power rents. We show that more bank competition results in lower economy-wide risk, lower bank capital ratios, more efficient production plans and...

In this paper we revisit the long debate on the risk effects of bank competition and propose a new approach to the empirical estimation of the relation between deposit market competition and bank risk. Our approach accounts for the opportunity of banks to shift to wholesale funding when deposit...

How can competition enhance bank soundness? Does competition improve soundness via the efficiency channel? Do banks heterogeneously respond to competition? To answer these questions, we exploit an innovative measure of competition [Boone, J., A new way to measure competition, EconJnl, Vol. 118,...

This study investigates the effects of relationship lending on firm innovativeness using a panel of Italian manufacturing firms. In order to disentangle the impact of bank ties on the discovery phase from that in the introduction phase of new technologies, the analysis proceeds in two steps,...

Banks play a central role in financing and monitoring firms in transition economies. This study examines how bank competition affects the efficiency of credit allocation; monitoring of firms; and the firms' restructuring effort. In our model, banks compete to finance an investment project with...

The effect bank competition has on interest rates should depend on the fact that borrowers compete against each other. The borrowing rate of a firm affects its ability to compete in the industrial marketplace, and ultimately, its ability to repay its loans. Thus, competition amongst borrowers...

This paper examines how banks respond to the monetary policy of the European Central Bank (ECB) according to their characteristics and, in particular, to their market power, using banking micro-data from Eurozone countries over the period from 1999 to 2011. Our results suggest that banks with...

This paper investigates the effect of bank competition and financial stability on economic growth by examining panel-data from 38 European countries over 2001 to 2017. Bank competition is measured with the Boone indicator, and bank stability with Z-scores and non-performing loan ratios, all at...

This paper examines the effectiveness of the bank lending channel in a dual banking system in Malaysia, where both conventional and Islamic banks operate alongside each other. It also investigates the impact of bank competition on lending channels in financial systems. Using panel data from both...