IMF paper on bank risk-taking and competition

The IMF Working Paper "Bank risk-taking and competition revisited: New theory and new evidence" studies two new models in which banks face a non-trivial asset allocation decision.

The first model (CVH) predicts a negative relationship between banks' risk of failure and concentration, indicating a trade-off between competition and stability. The second model (BDN) predicts a positive relationship, suggesting no such trade-off exists. Both models can predict a negative relationship between

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