Abstract:
The primary purpose of this paper is to empirically investigate the impact of bank competition on financial stability in
India. We use a dynamic panel model to examine whether an increase in bank competition hindrances financial stability of commercial banks in India over the period 1996 to 2016. Findings reveal
that in India, a higher degree of bank competition is positively associated with the prevalence of non-performing loans. Additionally,
the positive impact of the Lerner index on Z-score lends support to
competition-fragility hypothesis. However, we argue that both the
views of competition-stability and competition-fragility can coexist
in a single banking system like India
