Competitive Banking with Moral Hazard PDF Download
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Author: David S. Bizer
Publisher:
ISBN:
Category : Banks and banking
Languages : en
Pages : 36
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Book Description
Author: David S. Bizer
Publisher:
ISBN:
Category : Banks and banking
Languages : en
Pages : 36
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Book Description
Author: Laura Sabani
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Author: United States. Department of the Treasury
Publisher:
ISBN:
Category : Banking law
Languages : en
Pages : 780
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Book Description
Author: Mr.Gianni De Nicolo
Publisher: International Monetary Fund
ISBN: 1451853815
Category : Business & Economics
Languages : en
Pages : 25
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Book Description
This study reinvestigates the theoretical relationship between competition in banking and banks' exposure to risk of failure. There is a large existing literature that concludes that when banks are confronted with increased competition, they rationally choose more risky portfolios. We briefly review this literature and argue that it has had a significant influence on regulators and central bankers, causing them to take a less favorable view of competition and encouraging anti-competitive consolidation as a response to banking instability. We then show that existing theoretical analyses of this topic are fragile, since they do not detect two fundamental risk-incentive mechanisms that operate in exactly the opposite direction, causing banks to aquire more risk per portfolios as their markets become more concentrated. We argue that these mechanisms should be essential ingredients of models of bank competition.
Author: Nobuhiko Hibara
Publisher:
ISBN:
Category :
Languages : en
Pages : 126
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Book Description
Author: Mr.Tito Cordella
Publisher: International Monetary Fund
ISBN: 1451851995
Category : Business & Economics
Languages : en
Pages : 46
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Book Description
This paper studies the impact of competition on the determination of interest rates and banks’ risk-taking behavior under different assumptions about deposit insurance and the dissemination of financial information. It finds that lower entry costs foster competition in deposit rate sand reduce banks’ incentives to limit risk exposure. Although higher insurance coverage amplifies this effect, two alternative arrangements (risk-based contributions to the insurance fund and public disclosure of financial information) help to reduce it. Moreover, uninsured but fully informed depositors and risk-based full deposit insurance yield the same equilibrium risk level, which is independent of entry costs. The welfare implications of the different arrangements are also explored.
Author: Juan Flores Zendejas
Publisher: Routledge
ISBN: 1000515028
Category : Business & Economics
Languages : en
Pages : 167
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Book Description
Moral Hazard is a core concept in economics. In a nutshell, moral hazard reflects the reduced incentive to protect against risk where an entity is (or believes it will be) protected from its consequences, whether through an insurance arrangement or an implicit or explicit guarantee system. It is fundamentally driven by information asymmetry, arises in all sectors of the economy, including banking, medical insurance, financial insurance, and governmental support, undermines the stability of our economic systems and has burdened taxpayers in all developed countries, resulting in significant costs to the community. Despite the seriousness and pervasiveness of moral hazard, policymakers and scholars have failed to address this issue. This book fills this gap. It covers 200 years of moral hazard: from its origins in the 19th century to the bailouts announced in the aftermath of the COVID-19 outbreak. The book is divided into three parts. Part I deals with the ethics and other fundamental issues connected to moral hazard. Part II provides historical and empirical evidence on moral hazard in international finance. It examines in turn the role of the export credit industry, the international lender of last resort, and the IMF. Finally, Part III examines specific sectors such as automobile, banking, and the US industry at large. This is the first book to provide an interdisciplinary analysis of moral hazard and explain why addressing this issue has become crucial today. As such, it will attract interest from scholars across different fields, including economists, political scientists and lawyers.
Author: Mr.Gianni De Nicolo
Publisher: International Monetary Fund
ISBN: 1463927290
Category : Business & Economics
Languages : en
Pages : 39
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Book Description
We study versions of a general equilibrium banking model with moral hazard under either constant or increasing returns to scale of the intermediation technology used by banks to screen and/or monitor borrowers. If the intermediation technology exhibits increasing returns to scale, or it is relatively efficient, then perfect competition is optimal and supports the lowest feasible level of bank risk. Conversely, if the intermediation technology exhibits constant returns to scale, or is relatively inefficient, then imperfect competition and intermediate levels of bank risks are optimal. These results are empirically relevant and carry significant implications for financial policy.
Author: Gianni De Nicolò
Publisher:
ISBN:
Category :
Languages : en
Pages : 33
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Book Description
Author: Mr.Eduardo Levy Yeyati
Publisher: International Monetary Fund
ISBN: 145185238X
Category : Business & Economics
Languages : en
Pages : 23
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Book Description
The removal of government guarantees in borrowing countries does not eliminate the moral hazard problem posed by the existence of deposit guarantees in lender countries. The paper shows that, after restrictions on international capital flows are lifted, banks in low-risk developed countries benefit from lending funds captured in home markets at low deposit rates to high-risk/high-yield projects in emerging economies, even though these projects command lower expected returns. This, in turn, has a negative impact on bank profitability in the borrowing country, even when foreign funds are intermediated through domestic banks. The results are consistent with the surge in international bank lending flows that led to recent banking crises in Asia.
