Bank competition: : Measurement, decision-making, and risk-taking

• Autores: Robert M. Bushman, Bradley e. Hendricks, Christopher D. Williams
• Localización: Journal of Accounting Research, ISSN-e 1475-679X, Vol. 54, Nº. 3, 2016, págs. 777-826
• Idioma: inglés
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• Dialnet Métricas: 1 Cita
• Resumen

  • This paper investigates whether greater competition increases or decreases individual bank and banking system risk. Using a new text-based measure of competition, and an instrumental variables analysis that exploits exogenous variation in bank deregulation, we provide robust evidence that greater competition increases both individual bank risk and a bank's contribution to system-wide risk. Specifically, we find that higher competition is associated with lower underwriting standards, less timely loan loss recognition, and a shift toward noninterest revenue. Further, we find that higher competition is associated with higher stand-alone risk of individual banks, greater sensitivity of a bank's downside equity risk to system-wide distress, and a greater contribution by individual banks to downside risk of the banking sector.