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Competition among banks: good or bad?

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Abstract

What are the pros and cons of bank competition? This article presents an overview of the most recent research on the economic role of bank competition. Contrary to the received wisdom that competition in the banking industry is necessarily welfare enhancing, theoretical analyses and empirical evidence also identify possible negative economic effects. This broader view offers food for thought for regulators and policymakers.

Suggested Citation

  • Nicola Cetorelli, 2001. "Competition among banks: good or bad?," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 25(Q II), pages 38-48.
    • Handle: RePEc:fip:fedhep:y:2001:i:qii:p:38-48:n:v.25no.2
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