This paper analyzes the effects of a “too-big-to-fail” policy, modelled as a higher bail-out probability from the government for some bank, on the behavior of the privileged bank as well as on the remaining banking sector. Contrary to conventional wisdom, the impact on the large bank’s risk-taking is shown to depend on the opacity of banks, i. e., the particular information structure of the mod...

Increased focus on price stability by a discretionary central bank reduces output and price volatility in a model with rationally inattentive …rms. The volatility reduction can be arbitrarily large, e.g., imply a ‘Great Moderation’, and is particularly pronounced when …rms can process information almost perfectly. The model-implied vector auto-regressive (VAR) dynamics are consistent with the e...

Central banks have been faced with many conceptual challenges in the course of ensuring financial system stability. The list of problems includes the ability to predict the likelihood and severity of financial crises, the optimum level of prudential capital requirements, and the early detection of the risk of individual bank failure. This issue of the Bulletin highlights the results of analyses...

What is the impact of a bank failure on the whole banking industry? To resolve this issue, the paper develops a transfer entropy-based method to determine the interbank exposure matrix between banks. This method constructs the interbank market structure by calculating the transfer entropy matrix using bank stock price sequences. This paper also evaluates the stability of Chinese banking system ...

This paper discusses the effects of bank consolidation on competition and stability in the banking sector. Most empirical literature seems to point towards the standard adverse effects on prices of increased concentration in banking. A major issue is the still regional character of loan and deposit markets for households and small enterprises, which contrasts with the generally increasing globa...

Twenty years after their discovery, knots in proteins are now quite well understood. They are believed to be functionally advantageous and provide extra stability to protein chains. In this work, we go one step further and search for links-entangled structures, more complex than knots, which consist of several components. We derive conditions that proteins need to meet to be able to form links....

This paper aims to examine the moderating role of shadow banking in relation impact bank competition on stability over a period from 2016 2021 Vietnam. After building index by combining principal components CAMELS through Principal Component Analysis (PCA), and Lerner as measure competition, this research uses panel corrected standard errors (PCSE) analyze data 20 Vietnamese commercial banks 20...

The European banking industry joined forces to achieve a fully integrated market for retail payment services in the euro area: the Single Euro Payments Area (SEPA). Against this background, the present paper examines the fundamental relationship between retail payment business and overall bank performance. Using data from across 27 European markets over the period 2000–2007, we analyse whether ...

This paper estimates the relationship between banking market concentration and high-risk portfolio strategies at commercial banks. I use the unprecedented changes in the degree of competition in local banking markets that occurred after 1980 to estimate the impact of market competition on the risk profile of commercial bank lending. I find evidence that increasing concentration has been associa...

This paper examined the relationship between financial inclusion and stability in South Africa. In so doing, Engle-Granger approach to Error Correction Model (ECM) was used on quarterly time-series data for period 2004 2020. Two different variables were measure inclusion, namely commercial bank branches per 100,000 adults (CBB) number of ATMs 100 000 (ATMs), which regressed separately against B...