Greater competition leads to riskier banking, ECB working paper says
More securitisation was a symptom of a more competitive environment pre-crisis
A new paper published by the European Central Bank (ECB) has found that an increased use of securitisation by banks in the run-up to the 2007–2009 crisis "augmented the effect of competition on realized bank risk during the crisis".
In Competition and bank risk: The effect of securitization and bank capital, David Marques-Ibanez, Yener Altunbas and Michiel van Leuvensteijn find that "as competition increases, banks resorting more heavily to securitization activity have more incentives to
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