Competition and Bank Liquidity Creation / Liangliang Jiang, Ross Levine, Chen Lin.

Format:

Book

Author/Creator:

Jiang, Liangliang.

Contributor:

National Bureau of Economic Research.

Levine, Ross.

Lin, Chen.

Series:

Working Paper Series (National Bureau of Economic Research) no. w22195.

NBER working paper series no. w22195

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

Does an intensification of competition among banks increase or decrease liquidity creation? By integrating the dynamic process of interstate bank deregulation that lowered barriers to competition across U.S. states over the 1980s and 1990s with the gravity model of the geographic expansion of banks, we construct time-varying measures of the competitive pressures facing each individual bank. We find that regulatory-induced competition reduced liquidity creation. Consistent with some theories, we also find that the liquidity-destroying effects of competition are mitigated among more profitable banks and heightened among smaller banks.

Notes:

Print version record

April 2016.