Competition strengthens banks close to insolvency – BoE paper

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Policies that look to foster competition in the banking sector might actually drive improvements in the stability of firms that are close to insolvency, a working paper published by the Bank of England concludes.

Using data from between 1994 and 2013, Sebastian de-Ramon, William Francis and Michael Straughan conclude competition “on average”, lowers stability. But the effect of competition appears to vary across banks depending on their underlying health.

According to the results, competition

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