4 Conclusion
The developments in the banking market leading to the financial crisis in 2008 have once
again heightened interest in the determinants of bank risk. An increasingly competitive
environment caused by the growing internationalization of financial markets and the emergence
of non-bank players in the market for corporate financing has often been seen as
contributing to increasing banks’ incentives to take risks. This perception of the effects of
higher competition on bank risk is confirmed by a large array of theoretical and empirical
banking models. Using unique regulatory data available from the Bundesbank we revisit
the bank competition-stability nexus.