PN-II-RU-TE-2014-4-0291
How Banking Competition, Efficiency and Stability Evolve During the Crisis in Europe: An Agent - Principal Approach
Supported by a grant of
The Romanian National Authority for Scientific Research and Innovation, CNCS – UEFISCDI
The topic of competition, efficiency and stability in the banking system has attracted the attention of scholars and policy makers especially after the recent global financial crisis. The research is closely linked to the fact that banking is one of the most regulated sectors of the economy, and the European integration process includes the banking integration.
There is apparently contradictory theory regarding the relation between the competition and stability in banking. The “competition - fragility” approach suggests that an increase of the competition will enhance the financial fragility, while the “competition – stability” approach considers that the increase of the banks’ market power enhances the total exposure risk.
The research question is the following: What is the impact of bank governance on the competition, efficiency and financial stability in the context of the global financial crisis?
Our project has two major research objectives:
Objective 1. Analysis of the banking governance (at commercial bank, central bank and government level) that determines the competition, efficiency and financial stability;
Objective 2. Analysis of the two-way relations between the competition, efficiency and financial stability in the European Union.