Use this URL to cite or link to this record in EThOS: https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.782118
Title: Bank competition, monetary policy transmission, and financial stability in the U.S.
Author: Muharam, Mohammed
ISNI:       0000 0004 7967 7240
Awarding Body: Bangor University
Current Institution: Bangor University
Date of Award: 2019
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Abstract:
Over the past three decades the commercial banking system in the United States (U.S.) has undergone a period of consolidation and restructuring. Moreover, the recent financial crisis of 2007-2009 raised questions about the future of the economy that may affect many individuals and institutions now and for years to come. In particular, the crisis raised concerns about how and why banks interact with each other and the economy, and consideration of the implications, not only for business cycles, but also the long-term health and stability of the economy. From a theoretical point of view, increased competition has “direct” effects as the driving force behind the acceleration in consolidation. This has raised concerns regarding the increased concentration in the banking sector and, according to the industrial organization (IO) literature, an increase in bank market power (MP). In turn, MP in banking is the channel through which consolidation could have “indirect” effects on other economic phenomena. Indeed, there is a counter-argument in the literature that proposes that increases in competition and financial innovation in markets, such as subprime lending, have contributed to the recent financial turmoil. Another concern is that the crisis and government support for the largest banks increased bank concentration, reducing credit availability for small firms and economic growth, and potentially contributing to future instability as a result of moral hazard problems, associated with too-big-to-fail institutions. Larger banks, especially those with greater MP are more likely to engage in risky activities and may, therefore, be more exposed to instability. These banks know that because of their systemically important size, they will be protected by the government safety net, under the so-called the concept ‘too-big-to-fail’, developed by Mishkin (1999).
Supervisor: Goddard, John Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.782118  DOI: Not available
Keywords: bank competition ; monetary policy ; financial stability
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