In the way we have calculated the B

In the way we have calculated the Boone Indicator, it is a
competition measure which varies across the 16 federal states in Germany. The point
estimate of the Boone Indicator variable is positive and highly significant. Recall that the
Boone indicator measures how harshly banks are punished in terms of profits for being
inefficient. Higher values of the Boone Indicator imply that a specific market allows banks
to generate relatively high profits (although being relatively inefficient), thereby indicating
that the market is characterized by a low degree of competitive pressure. A positive
coefficient of the Boone indicator thus implies that banks operating in low-competition
banking markets have a higher probability of experiencing a distress event. This result is
in line with Schaeck and Cihak (2010), who also find that increasing competition, measured
by the Boone Indicator, has a tendency to reduce risk taking at the bank level.