Market competition fuels volatility in frail regulatory environments – Bank of Spain research

Bank of Spain
Luis García

Excessive competition in markets lacking effective legal and financial regulations increases moral hazard and accounts for significant output losses, says research published by the Bank of Spain.

On financial frictions and firm market power by Miguel Casares, Luca Deidda and José Galdón-Sánchez finds “that, aside from the standard negative effect, which adversely affects welfare, market power mitigates financial frictions”.

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