Introduction
Introduction
This book explores the relationship between competition and stability in the banking sector as well as the policy consequences for regulation and competition policy. It asks whether excessive competition has helped the overexpansion of credit, mostly in the real estate sector, that is at the base of the 2007–2009 crisis, and whether excessive competition has destabilized the financial system. It examines whether competition policy is needed in the banking sector, and if so, how it has to interact with regulation. It also considers the implications for the regulatory financial policy and the institutional architecture of competition policy. The book provides an up-to-date review of the theory and empirics of banking competition and its relationship with stability, and incorporates the analysis of modern market-based banking, systemic risk, and macroprudential regulation. It also explains how crisis interventions have interacted with competition policy and the role that the latter should have in a crisis.
Keywords: competition, stability, banking sector, regulation, competition policy, credit, financial crisis, systemic risk, macroprudential regulation, crisis interventions
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