This study reinvestigates the theoretical relationship between competition in banking and banks' exposure to risk of failure. There is a large existing literatu

This paper studies two new models in which banks face a non-trivial asset allocation decision. The first model (CVH) predicts a negative relationship between ba

Greater competition in banking is traditionally believed to aggravate banks' incentive to take excessive risks. This paper presents a model in which, contrary t

Bank competition can induce excessive risk taking due to risk shifting. This paper tests this hypothesis using micro-level U.S. mortgage data by exploiting the