01889cas a2200253 a 4500 AALejournalIMF002828 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451842814 1018-5941 BD-DhAAL BD-DhAAL Tieman, Alexander. Banking Competition, Risk, and Regulation / Alexander Tieman, Wilko Bolt. Washington, D.C. : International Monetary Fund, 2004. 1 online resource (26 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students In a dynamic theoretical framework, commercial banks compete for customers by setting acceptance criteria for granting loans, taking regulatory requirements into account. By easing its acceptance criteria a bank faces a trade-off between attracting more demand for loans, thus making higher per period profits, and a deterioration of the quality of its loan portfolio, thus tolerating a higher risk of failure. Our main results state that more stringent capital adequacy requirements lead banks to set stricter acceptance criteria, and that increased competition in the banking industry leads to riskier bank behavior. In an extension of our basic model, we show that it may be beneficial for a bank to hold more equity than prescribed by the regulator, even though holding equity is more expensive than attracting deposits. Mode of access: Internet Bolt, Wilko. IMF Working Papers; Working Paper ; No. 2004/011 Full text available on IMF http://elibrary.imf.org/view/journals/001/2004/011/001.2004.issue-011-en.xml IMF e-Library