. Although competition reduces firm revenues and benefits consumers initially, shrouding helps banks offset the vast majority of …

Bank competition can induce excessive risk taking due to risk shifting. This paper tests this hypothesis using micro …-level U.S. mortgage data by exploiting the exogenous variation in local house price volatility. The paper finds that, in … response to high expected house price volatility, banks in U.S. counties with a competitive mortgage market lowered lending …