Competition and Scope of Activities in Financial Services
This article analyzes the costs and benefits of different degrees of competition and different configurations of permissible activities in the financial sector and discusses the related implications for regulation and supervision. Theory and experi...
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| Format: | Journal Article |
| Language: | English en_US |
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Washington, DC: World Bank
2014
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| Online Access: | http://hdl.handle.net/10986/17134 |
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okr-10986-17134 |
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oai_dc |
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okr-10986-171342017-12-14T08:59:49Z Competition and Scope of Activities in Financial Services Claessens, Stijn Klingebiel, Daniela ACCESS TO FINANCING ACCESS TO INFORMATION ACCESS TO SERVICES ACCOUNTING ACCOUNTING RECORDS ADVERSE EFFECT ADVERSE EFFECTS AFFILIATES BANK ACCOUNT BANK ACTIVITIES BANK BRANCHES BANK DEPOSITS BANK EARNINGS BANK FINANCING BANK FOR INTERNATIONAL SETTLEMENTS BANK HOLDING COMPANIES BANK HOLDING COMPANY BANK OF KOREA BANK OPERATIONS BANK REGULATIONS BANK RISK BANKING CRISES BANKING INDUSTRY BANKING SECTOR BANKING STRUCTURE BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BORROWER BROKER-DEALER CAPITAL ADEQUACY CAPITAL MARKET CAPITAL MARKETS CAPITAL REQUIREMENTS CENTRAL BANKING COMMERCIAL BANK COMMERCIAL BANKING COMMERCIAL BANKS COMPETITIVE MARKET CONFLICT OF INTEREST CONFLICTS OF INTEREST CONSOLIDATION CONSUMER CREDIT CONSUMER LENDING CONSUMER PROTECTION CONTESTABLE SYSTEM COOPERATIVE BANKS CORPORATE FINANCE CORPORATE SECURITIES COST OF CAPITAL CREDIT INSTITUTIONS DEBT DEPOSIT DEPOSIT INSURANCE DEPOSIT RATES DEPOSITORY DEPOSITORY INSTITUTIONS DEPOSITS DEREGULATION DEVELOPING COUNTRIES DISCLOSURE REQUIREMENTS DISINTERMEDIATION DISSEMINATION OF INFORMATION DIVERSIFICATION BENEFITS DOMESTIC BANKS ECONOMIC POWER ECONOMIES OF SCALE EMERGING MARKET EMERGING MARKET ECONOMIES ENTRY BARRIERS EQUITY INVESTMENT EXCHANGE COMMISSION EXIT POLICIES EXPLOITATION EXPOSURE EXTERNAL SHOCKS FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF ATLANTA FEDERAL RESERVE BANK OF NEW YORK FINANCIAL CONGLOMERATES FINANCIAL CONSTRAINT FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL INSTABILITY FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL PRODUCT FINANCIAL PRODUCTS FINANCIAL REFORM FINANCIAL REGULATION FINANCIAL RISKS FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FINANCIAL SECTOR STRATEGY FINANCIAL SECTORS FINANCIAL SERVICE FINANCIAL SERVICES FINANCIAL SERVICES INDUSTRY FINANCIAL STABILITY FINANCIAL STRENGTH FINANCIAL STRUCTURE FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN BANKS FOREIGN COMPETITION FOREIGN ENTRY FOREIGN INVESTMENT FOREIGN INVESTORS FOREIGN OWNERSHIP FUND MANAGER GLOBALIZATION GOVERNMENT POLICIES HOME COUNTRY INCOME INDUSTRIAL COUNTRIES INFORMATION TECHNOLOGY INSURANCE ACTIVITIES INSURANCE PREMIUMS INSURER INTEREST RATE INTERNATIONAL BANK INTERNATIONAL BANKERS INTERNATIONAL FINANCIAL MARKETS INVESTMENT BANKING INVESTMENT DECISIONS INVESTMENT REGULATIONS JURISDICTION LAWS LEGAL CONSTRAINTS LIBERAL ENTRY LIBERALIZATION LIQUIDITY MARGINAL COSTS MARKET DEVELOPMENT MARKET SHARE MARKET STRUCTURE MARKET VALUE MONEY MARKET MONOPOLISTIC BEHAVIOR MORAL HAZARD MORTGAGE MORTGAGE LENDING MUTUAL FUND NATIONAL BANKS NEW ENTRANTS NONBANK FINANCIAL INSTITUTIONS OPEN MARKET OPERATIONAL EFFICIENCY OUTPUT PAYMENT SERVICES PERFORMANCE MEASURES POLITICAL ECONOMY POLITICAL POWER PORTFOLIO PORTFOLIOS POTENTIAL INVESTORS PRIVATIZATION PRODUCTIVITY PROFITABILITY PRUDENTIAL REQUIREMENTS PUBLIC POLICY PUBLIC SAFETY NET RATING AGENCIES REGULATOR REGULATORS REGULATORY FRAMEWORK REGULATORY OBJECTIVES REGULATORY REGIME REGULATORY REGIMES REGULATORY RESTRICTIONS REGULATORY STANDARDS REPUTATION RESOURCE ALLOCATION RISK DIVERSIFICATION RISK EXPOSURES RISK MANAGEMENT RISK OF BANK FAILURE RISK TAKING SAFETY NET SAFETY NETS SALE OF SECURITIES SECURITIES SECURITIES ACTIVITIES SECURITIES EXCHANGE SECURITIES MARKET SECURITIES MARKETS SECURITIES TRANSACTIONS SINGLE MARKET SMALL BUSINESS SPECIALIZED BANKS SUBSIDIARIES SUBSIDIARY SUPERVISORY AGENCIES SUPERVISORY AGENCY SYSTEMIC RISK TRANSACTION COSTS UNFAIR COMPETITION UNION UNIVERSAL BANK UNIVERSAL BANKING UNIVERSAL BANKS This article analyzes the costs and benefits of different degrees of competition and different configurations of permissible activities in the financial sector and discusses the related implications for regulation and supervision. Theory and experience demonstrate the importance of competition for efficiency and confirm that a competitive environment requires a contestable system meaning one that is open to competition-but not necessarily a large number of institutions. A competitive banking system can improve the distribution of consumer credit, enhance the corporate sector's access to financing, and mitigate the risks of financial crises. In an open market, in which services and products are provided in response to market signals, financial institutions respond by offering a wider scope of financial services. The optimal institutional design for supervisory functions is less obvious. This article reviews alternative frameworks for financial services markets from an economic perspective using experiences in several countries as a guide. Authors focus first on the role of competition in the financial sector and the tradeoffs between competition on the one hand and stability and innovation on the other. Authors next examine alternative structures of financial services dictated in many countries. 2014-02-20T23:27:22Z 2014-02-20T23:27:22Z 2001-04 Journal Article World Bank Research Observer http://hdl.handle.net/10986/17134 English en_US CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo/ World Bank Washington, DC: World Bank Publications & Research :: Journal Article Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
World Bank |
| building |
World Bank Open Knowledge Repository |
| collection |
Online Access |
| language |
English en_US |
| topic |
ACCESS TO FINANCING ACCESS TO INFORMATION ACCESS TO SERVICES ACCOUNTING ACCOUNTING RECORDS ADVERSE EFFECT ADVERSE EFFECTS AFFILIATES BANK ACCOUNT BANK ACTIVITIES BANK BRANCHES BANK DEPOSITS BANK EARNINGS BANK FINANCING BANK FOR INTERNATIONAL SETTLEMENTS BANK HOLDING COMPANIES BANK HOLDING COMPANY BANK OF KOREA BANK OPERATIONS BANK REGULATIONS BANK RISK BANKING CRISES BANKING INDUSTRY BANKING SECTOR BANKING STRUCTURE BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BORROWER BROKER-DEALER CAPITAL ADEQUACY CAPITAL MARKET CAPITAL MARKETS CAPITAL REQUIREMENTS CENTRAL BANKING COMMERCIAL BANK COMMERCIAL BANKING COMMERCIAL BANKS COMPETITIVE MARKET CONFLICT OF INTEREST CONFLICTS OF INTEREST CONSOLIDATION CONSUMER CREDIT CONSUMER LENDING CONSUMER PROTECTION CONTESTABLE SYSTEM COOPERATIVE BANKS CORPORATE FINANCE CORPORATE SECURITIES COST OF CAPITAL CREDIT INSTITUTIONS DEBT DEPOSIT DEPOSIT INSURANCE DEPOSIT RATES DEPOSITORY DEPOSITORY INSTITUTIONS DEPOSITS DEREGULATION DEVELOPING COUNTRIES DISCLOSURE REQUIREMENTS DISINTERMEDIATION DISSEMINATION OF INFORMATION DIVERSIFICATION BENEFITS DOMESTIC BANKS ECONOMIC POWER ECONOMIES OF SCALE EMERGING MARKET EMERGING MARKET ECONOMIES ENTRY BARRIERS EQUITY INVESTMENT EXCHANGE COMMISSION EXIT POLICIES EXPLOITATION EXPOSURE EXTERNAL SHOCKS FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF ATLANTA FEDERAL RESERVE BANK OF NEW YORK FINANCIAL CONGLOMERATES FINANCIAL CONSTRAINT FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL INSTABILITY FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL PRODUCT FINANCIAL PRODUCTS FINANCIAL REFORM FINANCIAL REGULATION FINANCIAL RISKS FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FINANCIAL SECTOR STRATEGY FINANCIAL SECTORS FINANCIAL SERVICE FINANCIAL SERVICES FINANCIAL SERVICES INDUSTRY FINANCIAL STABILITY FINANCIAL STRENGTH FINANCIAL STRUCTURE FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN BANKS FOREIGN COMPETITION FOREIGN ENTRY FOREIGN INVESTMENT FOREIGN INVESTORS FOREIGN OWNERSHIP FUND MANAGER GLOBALIZATION GOVERNMENT POLICIES HOME COUNTRY INCOME INDUSTRIAL COUNTRIES INFORMATION TECHNOLOGY INSURANCE ACTIVITIES INSURANCE PREMIUMS INSURER INTEREST RATE INTERNATIONAL BANK INTERNATIONAL BANKERS INTERNATIONAL FINANCIAL MARKETS INVESTMENT BANKING INVESTMENT DECISIONS INVESTMENT REGULATIONS JURISDICTION LAWS LEGAL CONSTRAINTS LIBERAL ENTRY LIBERALIZATION LIQUIDITY MARGINAL COSTS MARKET DEVELOPMENT MARKET SHARE MARKET STRUCTURE MARKET VALUE MONEY MARKET MONOPOLISTIC BEHAVIOR MORAL HAZARD MORTGAGE MORTGAGE LENDING MUTUAL FUND NATIONAL BANKS NEW ENTRANTS NONBANK FINANCIAL INSTITUTIONS OPEN MARKET OPERATIONAL EFFICIENCY OUTPUT PAYMENT SERVICES PERFORMANCE MEASURES POLITICAL ECONOMY POLITICAL POWER PORTFOLIO PORTFOLIOS POTENTIAL INVESTORS PRIVATIZATION PRODUCTIVITY PROFITABILITY PRUDENTIAL REQUIREMENTS PUBLIC POLICY PUBLIC SAFETY NET RATING AGENCIES REGULATOR REGULATORS REGULATORY FRAMEWORK REGULATORY OBJECTIVES REGULATORY REGIME REGULATORY REGIMES REGULATORY RESTRICTIONS REGULATORY STANDARDS REPUTATION RESOURCE ALLOCATION RISK DIVERSIFICATION RISK EXPOSURES RISK MANAGEMENT RISK OF BANK FAILURE RISK TAKING SAFETY NET SAFETY NETS SALE OF SECURITIES SECURITIES SECURITIES ACTIVITIES SECURITIES EXCHANGE SECURITIES MARKET SECURITIES MARKETS SECURITIES TRANSACTIONS SINGLE MARKET SMALL BUSINESS SPECIALIZED BANKS SUBSIDIARIES SUBSIDIARY SUPERVISORY AGENCIES SUPERVISORY AGENCY SYSTEMIC RISK TRANSACTION COSTS UNFAIR COMPETITION UNION UNIVERSAL BANK UNIVERSAL BANKING UNIVERSAL BANKS |
| spellingShingle |
ACCESS TO FINANCING ACCESS TO INFORMATION ACCESS TO SERVICES ACCOUNTING ACCOUNTING RECORDS ADVERSE EFFECT ADVERSE EFFECTS AFFILIATES BANK ACCOUNT BANK ACTIVITIES BANK BRANCHES BANK DEPOSITS BANK EARNINGS BANK FINANCING BANK FOR INTERNATIONAL SETTLEMENTS BANK HOLDING COMPANIES BANK HOLDING COMPANY BANK OF KOREA BANK OPERATIONS BANK REGULATIONS BANK RISK BANKING CRISES BANKING INDUSTRY BANKING SECTOR BANKING STRUCTURE BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BORROWER BROKER-DEALER CAPITAL ADEQUACY CAPITAL MARKET CAPITAL MARKETS CAPITAL REQUIREMENTS CENTRAL BANKING COMMERCIAL BANK COMMERCIAL BANKING COMMERCIAL BANKS COMPETITIVE MARKET CONFLICT OF INTEREST CONFLICTS OF INTEREST CONSOLIDATION CONSUMER CREDIT CONSUMER LENDING CONSUMER PROTECTION CONTESTABLE SYSTEM COOPERATIVE BANKS CORPORATE FINANCE CORPORATE SECURITIES COST OF CAPITAL CREDIT INSTITUTIONS DEBT DEPOSIT DEPOSIT INSURANCE DEPOSIT RATES DEPOSITORY DEPOSITORY INSTITUTIONS DEPOSITS DEREGULATION DEVELOPING COUNTRIES DISCLOSURE REQUIREMENTS DISINTERMEDIATION DISSEMINATION OF INFORMATION DIVERSIFICATION BENEFITS DOMESTIC BANKS ECONOMIC POWER ECONOMIES OF SCALE EMERGING MARKET EMERGING MARKET ECONOMIES ENTRY BARRIERS EQUITY INVESTMENT EXCHANGE COMMISSION EXIT POLICIES EXPLOITATION EXPOSURE EXTERNAL SHOCKS FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF ATLANTA FEDERAL RESERVE BANK OF NEW YORK FINANCIAL CONGLOMERATES FINANCIAL CONSTRAINT FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL INSTABILITY FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL PRODUCT FINANCIAL PRODUCTS FINANCIAL REFORM FINANCIAL REGULATION FINANCIAL RISKS FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FINANCIAL SECTOR STRATEGY FINANCIAL SECTORS FINANCIAL SERVICE FINANCIAL SERVICES FINANCIAL SERVICES INDUSTRY FINANCIAL STABILITY FINANCIAL STRENGTH FINANCIAL STRUCTURE FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN BANKS FOREIGN COMPETITION FOREIGN ENTRY FOREIGN INVESTMENT FOREIGN INVESTORS FOREIGN OWNERSHIP FUND MANAGER GLOBALIZATION GOVERNMENT POLICIES HOME COUNTRY INCOME INDUSTRIAL COUNTRIES INFORMATION TECHNOLOGY INSURANCE ACTIVITIES INSURANCE PREMIUMS INSURER INTEREST RATE INTERNATIONAL BANK INTERNATIONAL BANKERS INTERNATIONAL FINANCIAL MARKETS INVESTMENT BANKING INVESTMENT DECISIONS INVESTMENT REGULATIONS JURISDICTION LAWS LEGAL CONSTRAINTS LIBERAL ENTRY LIBERALIZATION LIQUIDITY MARGINAL COSTS MARKET DEVELOPMENT MARKET SHARE MARKET STRUCTURE MARKET VALUE MONEY MARKET MONOPOLISTIC BEHAVIOR MORAL HAZARD MORTGAGE MORTGAGE LENDING MUTUAL FUND NATIONAL BANKS NEW ENTRANTS NONBANK FINANCIAL INSTITUTIONS OPEN MARKET OPERATIONAL EFFICIENCY OUTPUT PAYMENT SERVICES PERFORMANCE MEASURES POLITICAL ECONOMY POLITICAL POWER PORTFOLIO PORTFOLIOS POTENTIAL INVESTORS PRIVATIZATION PRODUCTIVITY PROFITABILITY PRUDENTIAL REQUIREMENTS PUBLIC POLICY PUBLIC SAFETY NET RATING AGENCIES REGULATOR REGULATORS REGULATORY FRAMEWORK REGULATORY OBJECTIVES REGULATORY REGIME REGULATORY REGIMES REGULATORY RESTRICTIONS REGULATORY STANDARDS REPUTATION RESOURCE ALLOCATION RISK DIVERSIFICATION RISK EXPOSURES RISK MANAGEMENT RISK OF BANK FAILURE RISK TAKING SAFETY NET SAFETY NETS SALE OF SECURITIES SECURITIES SECURITIES ACTIVITIES SECURITIES EXCHANGE SECURITIES MARKET SECURITIES MARKETS SECURITIES TRANSACTIONS SINGLE MARKET SMALL BUSINESS SPECIALIZED BANKS SUBSIDIARIES SUBSIDIARY SUPERVISORY AGENCIES SUPERVISORY AGENCY SYSTEMIC RISK TRANSACTION COSTS UNFAIR COMPETITION UNION UNIVERSAL BANK UNIVERSAL BANKING UNIVERSAL BANKS Claessens, Stijn Klingebiel, Daniela Competition and Scope of Activities in Financial Services |
| description |
This article analyzes the costs and
benefits of different degrees of competition and different
configurations of permissible activities in the financial
sector and discusses the related implications for regulation
and supervision. Theory and experience demonstrate the
importance of competition for efficiency and confirm that a
competitive environment requires a contestable system
meaning one that is open to competition-but not necessarily
a large number of institutions. A competitive banking system
can improve the distribution of consumer credit, enhance the
corporate sector's access to financing, and mitigate
the risks of financial crises. In an open market, in which
services and products are provided in response to market
signals, financial institutions respond by offering a wider
scope of financial services. The optimal institutional
design for supervisory functions is less obvious. This
article reviews alternative frameworks for financial
services markets from an economic perspective using
experiences in several countries as a guide. Authors focus
first on the role of competition in the financial sector and
the tradeoffs between competition on the one hand and
stability and innovation on the other. Authors next examine
alternative structures of financial services dictated in
many countries. |
| format |
Journal Article |
| author |
Claessens, Stijn Klingebiel, Daniela |
| author_facet |
Claessens, Stijn Klingebiel, Daniela |
| author_sort |
Claessens, Stijn |
| title |
Competition and Scope of Activities in Financial Services |
| title_short |
Competition and Scope of Activities in Financial Services |
| title_full |
Competition and Scope of Activities in Financial Services |
| title_fullStr |
Competition and Scope of Activities in Financial Services |
| title_full_unstemmed |
Competition and Scope of Activities in Financial Services |
| title_sort |
competition and scope of activities in financial services |
| publisher |
Washington, DC: World Bank |
| publishDate |
2014 |
| url |
http://hdl.handle.net/10986/17134 |
| _version_ |
1610777100346720256 |