The report examines the interplay between banking competition and financial stability, taking into account the experiences in the recent global crisis and the policy response to it.
The report concludes the following three points:
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achieving the right balance between banking competition and financial stability remains elusive;
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the pre-crisis regulatory landscape has set in motion changes in business models and activities in response to competition that proved not to be conducive to financial stability;
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and the recent regulatory responses have not been adequate to address some of the fundamental problems affecting banking sectors and thus the risks to stability.
It notes further that the policy response to the financial crisis, consisting largely of the provision of the function of the guarantor of last resort for financial institutions, has further entrenched the perception that large and important financial institutions enjoy an implicit guarantee.
Report
© OECD
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