Bank risk and competition: The other side of the story

Laura Spierdijk; Michalis Zaouras

doi:10.4337/9781785363306.00010

Bank risk and competition: The other side of the story

Laura Spierdijk
, Michalis Zaouras

Research output: Chapter in Book/Report/Conference proceeding › Chapter › Academic › peer-review

1 Citation (Scopus)

Abstract

We analyze the “other side” of the competition–risk nexus in a setting of endogenous bank risk by expressing the Lerner index as a function of risk-related parameters and other determinants. Our main result is that banks’ ability to raise prices above the competitive level depends, among other things, on the extent to which lenders respond to an increase in the loan rate by taking more risk. This finding illustrates that differences in Lerner indices may arise as a result of differences in risk-taking behavior.

Original language	English
Title of host publication	Handbook of Competition in Banking and Finance
Editors	Jacob A. Bikker, Laura Spierdijk
Publisher	Edward Elgar
Pages	52-57
ISBN (Electronic)	9781785363306
ISBN (Print)	9781785363290
DOIs	https://doi.org/10.4337/9781785363306.00010
Publication status	Published - 2017
Externally published	Yes

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 10 Reduced Inequalities

Access to Document

10.4337/9781785363306.00010

Cite this

@inbook{10f1a0560c744deeaf4be4412e7e7ebd,

title = "Bank risk and competition: The other side of the story",

abstract = "We analyze the “other side” of the competition–risk nexus in a setting of endogenous bank risk by expressing the Lerner index as a function of risk-related parameters and other determinants. Our main result is that banks{\textquoteright} ability to raise prices above the competitive level depends, among other things, on the extent to which lenders respond to an increase in the loan rate by taking more risk. This finding illustrates that differences in Lerner indices may arise as a result of differences in risk-taking behavior.",

author = "Laura Spierdijk and Michalis Zaouras",

year = "2017",

doi = "10.4337/9781785363306.00010",

language = "English",

isbn = "9781785363290",

pages = "52--57",

editor = "Bikker, \{Jacob A.\} and Laura Spierdijk",

booktitle = "Handbook of Competition in Banking and Finance",

publisher = "Edward Elgar",

address = "United Kingdom",

}

TY - CHAP

T1 - Bank risk and competition

T2 - The other side of the story

AU - Spierdijk, Laura

AU - Zaouras, Michalis

PY - 2017

Y1 - 2017

N2 - We analyze the “other side” of the competition–risk nexus in a setting of endogenous bank risk by expressing the Lerner index as a function of risk-related parameters and other determinants. Our main result is that banks’ ability to raise prices above the competitive level depends, among other things, on the extent to which lenders respond to an increase in the loan rate by taking more risk. This finding illustrates that differences in Lerner indices may arise as a result of differences in risk-taking behavior.

AB - We analyze the “other side” of the competition–risk nexus in a setting of endogenous bank risk by expressing the Lerner index as a function of risk-related parameters and other determinants. Our main result is that banks’ ability to raise prices above the competitive level depends, among other things, on the extent to which lenders respond to an increase in the loan rate by taking more risk. This finding illustrates that differences in Lerner indices may arise as a result of differences in risk-taking behavior.

U2 - 10.4337/9781785363306.00010

DO - 10.4337/9781785363306.00010

M3 - Chapter

SN - 9781785363290

SP - 52

EP - 57

BT - Handbook of Competition in Banking and Finance

A2 - Bikker, Jacob A.

A2 - Spierdijk, Laura

PB - Edward Elgar

ER -

Bank risk and competition: The other side of the story

Abstract

UN SDGs

Access to Document

Fingerprint

Cite this