Riccardo De Bonis, Giuseppe Marinelli, Francesco Vercelli, 16 April 2018

There is no consensus on how to measure competition in the banking system, though the 'Boone indicator' of profit elasticity with respect to marginal costs has recently provided reliable results. This column uses a dataset of 125 years of bank balance sheets to calculate this indicator for the Italian banking system. It shows that regulatory changes have driven bank competition, an insight that is supported by other indicators.

David Marques-Ibanez, Michiel van Leuvensteijn, 03 February 2017

An unprecedented process of deregulation took place in the banking sector in the three decades prior to the Global Crisis. This column argues that during periods of intense bank competition, financial innovation can compound the adverse effects of competition on stability. Coupled with strong competition, the significant use of one such innovation – securitisation – in the run-up to the crisis was related to high levels of bank risk.

Michiel van Leuvensteijn, Adrian van Rixtel, Bing Xu, 12 June 2016

The unprecedented accommodative monetary policy stance implemented across the world in recent years has pushed interest rates to the zero lower bound, and even into negative territory. Based on an analysis of regulated floors and ceilings in bank loan and deposit interest rates in China, this column argues that when lending rates are close to regulatory imposed floors and hence cannot fall much further, the measurement of bank competition using more traditional measures of competition is flawed. This is important because lower bank competition has detrimental effects on the pass–through of interest rate changes and reduces risk-taking by banks.

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