摘要：This unique study examines the interactive role of bank competition and foreign bank entryin explaining the risk-taking of banks over the globe. We used cross-country data for the bankingsector from 2000 to 2016. Using the pooled regression model and Two-stage Least Squares model(2SLS with Generalized Method of Moments GMM), we document that foreign bank entry decreasesthe risk-taking behavior of the banks to a certain level and exhibits an inverted U-shaped relation withfinancial stability. Furthermore, the joint effect of bank competition and foreign bank entry bringsfinancial fragility because host banks tend to make risky investments due to undue competitioninduced by foreign bank entry. We support the competition–fragility hypothesis when foreign bankentry goes beyond a certain threshold. Our results also suggest that restrictions on bank activities andcapital regulation stringency reduce the level of the risk factor. We also applied various robustnesstests, which further confirm our mainstream results. Our findings have policy implications for foreigninvestors and regulatory authorities.
关键词：foreign bank entry; bank competition; H-statistics; pooled regression; dynamic panel models; risk-taking behavior
