Competition in the Financial Sector

Claessens, Stijn

dc.creator	Claessens, Stijn
dc.date	2012-03-30T07:12:34Z
dc.date	2012-03-30T07:12:34Z
dc.date	2009-03-30
dc.date.accessioned	2023-02-18T19:40:20Z
dc.date.available	2023-02-18T19:40:20Z
dc.identifier	World Bank Research Observer
dc.identifier	1564-6971
dc.identifier	http://hdl.handle.net/10986/4425
dc.identifier.uri	http://localhost:8080/xmlui/handle/CUHPOERS/249910
dc.description	Competition in the financial sector, as in other sectors, matters for allocative, productive, and dynamic efficiency. Theory suggests, however, that unfettered competition is not necessarily best given the special features of financial services. The author discusses these analytical complications before reviewing how to assess competition in the financial sector and its determinants. It is shown that competitiveness varies greatly across countries, in perhaps surprising ways, and that it is not driven by financial system concentration. Rather, systems with greater foreign entry and fewer entry and activity restrictions tend to be more competitive, confirming that contestability—the lack of barriers to entry and exit—determines effective competition. The author then analyzes how competition policy in the financial sector has generally been conducted and how changes in competition in the financial services industries should affect competition policy going forward. In part based on comparison with other industries, the author provides some suggestions on how competition policy in the financial sector could be better approached as well as what institutional arrangements best fit a modern view of competition policy in the sector. The specific competition challenges for developing countries is also highlighted. The author concludes that practices today fall far short of the need for better competition policy in the financial sector.
dc.publisher	World Bank
dc.rights	CC BY-NC-ND 3.0 IGO
dc.rights	http://creativecommons.org/licenses/by-nc-nd/3.0/igo/
dc.rights	World Bank
dc.subject	barriers to entry
dc.subject	competition policies
dc.subject	competition policy
dc.subject	deregulation
dc.subject	developing countries
dc.subject	financial contracts
dc.subject	financial markets
dc.subject	financial products
dc.subject	financial sector
dc.subject	financial sector stability
dc.subject	financial services
dc.subject	financial services industries
dc.subject	financial stability
dc.subject	financial system
dc.subject	financial systems
dc.subject	global financial markets
dc.subject	globalization
dc.subject	liberalization
dc.subject	liquidity
dc.subject	stock exchanges
dc.title	Competition in the Financial Sector
dc.type	Journal Article
dc.type	Journal Article
dc.coverage	Latin America
dc.coverage	Brazil
dc.coverage	Mexico
dc.coverage	Colombia
dc.coverage	Bolivia