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Regulations, competition and bank risk-taking in transition countries

Agoraki, MEK, Delis, MD and Pasiouras, F (2011) Regulations, competition and bank risk-taking in transition countries Journal of Financial Stability, 7 (1). pp. 38-48.

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This study investigates whether regulations have an independent effect on bank risk-taking or whether their effect is channeled through the market power possessed by banks. Given a well-established set of theoretical priors, the regulations considered are capital requirements, restrictions on bank activities and official supervisory power. We use data from the Central and Eastern European banking sectors over the period 1998-2005. The empirical results suggest that banks with market power tend to take on lower credit risk and have a lower probability of default. Capital requirements reduce risk in general, but for banks with market power this effect significantly weakens or can even be reversed. Higher activity restrictions in combination with more market power reduce both credit risk and the risk of default, while official supervisory power has only a direct impact on bank risk. © 2009 Elsevier B.V.

Item Type: Article
Divisions : Surrey research (other units)
Authors :
Agoraki, MEK
Delis, MD
Date : 1 January 2011
DOI : 10.1016/j.jfs.2009.08.002
Depositing User : Symplectic Elements
Date Deposited : 16 May 2017 15:15
Last Modified : 24 Jan 2020 14:11

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