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Aggregate concentration and the cost of systemic risk

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  • Sherrill Shaffer

Abstract

Aggregate concentration may exacerbate systemic risk if the social cost of business failure is a superlinear function of the fraction of industry capacity lost to failure. This result suggests new empirical tests to inform policy debates, as well as supporting an efficiency rationale for restricting aggregate concentration under certain conditions.

Suggested Citation

  • Sherrill Shaffer, 2007. "Aggregate concentration and the cost of systemic risk," Applied Economics Letters, Taylor & Francis Journals, vol. 14(6), pages 425-428.
    • Handle: RePEc:taf:apeclt:v:14:y:2007:i:6:p:425-428
    DOI: 10.1080/13504850500438751
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    5. Charles W. Calomiris & Joseph R. Mason, 2003. "Consequences of Bank Distress During the Great Depression," American Economic Review, American Economic Association, vol. 93(3), pages 937-947, June.
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