TY - JOUR
T1 - Allen and Gale on risk-taking and competition in banking
AU - Grochulski, Borys
AU - Kareken, John H
N1 - Copyright:
Copyright 2004 Elsevier B.V., All rights reserved.
PY - 2004/12
Y1 - 2004/12
N2 - Using an elegant simple model, Allen and Gale [Comparing Financial Systems, MIT Press, 2001] obtain a result with significant policy implications: portfolio risk of banks increases as competition in banking, measured by the number of banks, increases. That result is, however, lacking in robustness. If banks play a game not all that different from that assumed by Allen and Gale, then, we show, a markedly different result obtains: risk-taking by banks is independent of the number of banks.
AB - Using an elegant simple model, Allen and Gale [Comparing Financial Systems, MIT Press, 2001] obtain a result with significant policy implications: portfolio risk of banks increases as competition in banking, measured by the number of banks, increases. That result is, however, lacking in robustness. If banks play a game not all that different from that assumed by Allen and Gale, then, we show, a markedly different result obtains: risk-taking by banks is independent of the number of banks.
KW - Concentration and risk-taking in banking
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U2 - 10.1016/j.frl.2004.08.001
DO - 10.1016/j.frl.2004.08.001
M3 - Article
AN - SCOPUS:8744309311
SN - 1544-6123
VL - 1
SP - 236
EP - 240
JO - Finance Research Letters
JF - Finance Research Letters
IS - 4
ER -