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We examine how bank competition in the run-up to the 2007–2009 crisis affects banks’ systemic risk during the crisis. We then investigate whether this effect is influenced by two key bank characteristics: securitization and bank capital. Using a sample of the largest listed banks from 15 countries, we find that greater market power at the bank level and higher competition at the industry level lead to higher realized systemic risk. The results suggest that the use of securitization exacerbates the effects of market power on the systemic dimension of bank risk, while capitalization partially mitigates its impact.

Banks and banking --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money --- Risk management. --- Banks and Banking --- Finance: General --- Financial Risk Management --- Investments: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Firm Behavior: Empirical Analysis --- General Financial Markets: Government Policy and Regulation --- Financial Crises --- General Financial Markets: General (includes Measurement and Data) --- Financial Institutions and Services: Government Policy and Regulation --- Investment & securities --- Economic & financial crises & disasters --- Financial services law & regulation --- Systemic risk --- Securitization --- Financial crises --- Competition --- Financial sector policy and analysis --- Financial services --- Financial markets --- Capital adequacy requirements --- Financial regulation and supervision --- Financial risk management --- Asset-backed financing --- Asset requirements --- United States