Business Competition and Stability of Banking - Dissertation Example

The paper "Business Competition and Stability of Banking" is a wonderful example of a dissertation on business. Credit risk in financial institutions is a major concern for many policymakers, practitioners, and regulators. The concerns are particularly common at the onset of a given fiscal crisis. The financial sector enjoys much stability but in some cases, some factors lead to unexpected turns instability, and failure in operation. One of these factors is competition.

Competition in the banking and financial sector has been a major issue that leads to the development of instability in the industry. As a result, special attention has been received since the beginning of the financial crisis (Sealey & Lindley, p.2009). Stakeholders in the industry have conducted studies that seek to explain the issue in its entirety for the sector. The studies have published information that seeks to develop the relationship between the financial sector's competition, efficiency, and stability. Such studies have proved to be of great help in tackling the issues at hand and making the banking sector in all world economies more stable.

There has not been one agreed-upon conclusion on the relationship between banking industry stability and competition coupled with other factors. The academicians in the field are still divided and provide conflicting arguments and narratives of the topic. However, a recent theory and proof are pointing towards a positive outcome of competition on bank stability (Schaeck & Cihák, 2013, p.111). Thus, it becomes important to study competition and explain it in light of this development. Competition is then seen as both positive to a great extent one side of the scholars. On the other hand, some of the scholars still hold a negative view of competition in the banking industry. Conventional literature stipulates that an ever-increasing competition erodes character values that lead to a negative tradeoff between competition and the banking sector. The rationale behind this thinking is that of a negatively affected competition efficiency and stability of the banking sector due to over normal condition of competition in the industry.