Competition and Stability in Banking: The Role of Regulation and Competition Policy

The book discusses the relationship between competition, regulation, and stability in global banks, and the implications of coordinating banking regulations with competition policies. It argues that while competition is not responsible for fragility in banking, there are trade-offs between competition and stability, and well-designed regulations can alleviate these trade-offs. The book also examines the theory and empirics of banking competition, drawing on up-to-date analysis that incorporates the characteristics of modern market-based banking.

\n Format: Paperback / softback
\n Length: 344 pages
\n Publication date: 03 November 2020
\n Publisher: Princeton University Press
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Competition and Stability in Banking delves into the intricate interplay between competition, regulation, and stability within the global banking landscape. Authored by Xavier Vives, a distinguished economist, this comprehensive work examines the multifaceted dimensions of these critical factors and their impact on the financial sector.

Vives begins by asserting that while competition itself is not the root cause of fragility in banking, it does present trade-offs that must be carefully managed. Well-designed regulations can help alleviate these trade-offs, but they cannot entirely eliminate them. The unique characteristics of banking, particularly its market-based nature, must be taken into account when considering competition and stability policies.

In his analysis, Vives explores the theoretical foundations of banking competition, drawing on insights from various economic disciplines. He examines the impact of competition on efficiency, pricing, and innovation, as well as its potential consequences for consumer welfare and financial stability. Vives also reviews the empirical evidence supporting different competition policies, including measures such as anti-trust laws, bank branching restrictions, and capital requirements.

One of the key themes of the book is the coordination of regulation and competition policies. Vives argues that while these two policies serve different objectives, they can be complementary rather than conflicting. He suggests that tighter prudential requirements should be imposed in more competitive situations, to ensure the stability of the financial system. At the same time, competition policies should be designed to promote efficiency and innovation, fostering a healthy and dynamic banking sector.

Vives also examines the role of supervisory and competition authorities in ensuring the coordination of regulation and competition policies. He advocates for a clear separation of these two entities, each pursuing its own objective and ensuring that they do not interfere with each other's work. This separation is crucial to maintaining the integrity of the financial system and preventing conflicts of interest.

The book also takes a closer look at regulation, competition policies, and crisis interventions in Europe and the United States, as well as in emerging economies. Vives highlights the different approaches taken by these regions in addressing financial stability and promoting competition. He analyzes the successes and failures of these policies and offers insights into the challenges and opportunities that lie ahead.

In conclusion, Competition and Stability in Banking is a valuable resource for policymakers, academics, and industry professionals seeking to understand the complex dynamics of competition, regulation, and stability in banking. Authored by a distinguished economist, this book provides a comprehensive and insightful analysis of these critical factors, offering valuable insights into the future of the global financial system.

\n Weight: 558g\n
Dimension: 234 x 155 x 26 (mm)\n
ISBN-13: 9780691210032\n \n