Bank competition and risk-taking in the European Union: Evidence of a non-linear relationship

Autor:	Iulian Ihnatov, Nicoleta-Livia Pintilie, Bogdan Capraru
Rok vydání:	2021
Předmět:	bankstability Economic growth development planning International economics risk management Competition (economics) business model HD72-88 Economics media_common.cataloged_instance European union Risk taking General Economics Econometrics and Finance banking competition financial policy media_common
Zdroj:	Ekonomski Anali, Vol 66, Iss 230, Pp 35-65 (2021)
ISSN:	1820-7375 0013-3264
DOI:	10.2298/eka2130035c
Popis:	This paper assesses the impact of bank specialisation and business models on the relationship between competition and risk. We tested the non-linear relationship between bank competition and risk on an extensive sample of 5,119 European banks active during 2000-2018, using system GMM. The results confirmed the nonlinear relationship between competition and risk-taking. Cooperatives are better protected against liquidity risks and are more stable. Well-diversified banking entities take more risks than their counterparts, whereas larger institutions have a lower risk appetite and a higher exposure to liquidity shocks. Future regulations should consider different risk strategies to make them more efficient and to generate the expected outcomes. The most recent regulatory developments have reduced the risk appetite of large financial institutions. Lastly, it is critical that regulators monitor M&A activity and ensure the optimal competition level.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_dedup___::3a59d36c9542462260a03e429ec402f2 https://doi.org/10.2298/eka2130035c Zobrazit plný text záznamu Plný text ve formátu PDF