Competition and Regulation: The Case of the UK Banking Industry

Abstract

This study examines the impact of the Basel Accords on competition within the UK banking sector, considering variations based on bank size. The Basel Accords, designed to enhance financial stability, introduce provisions that may affect competition dynamics. Empirical analysis reveals divergent outcomes: large banks tend towards monopolization, while other banks shift towards a more competitive environment. Large banks benefit from regulatory barriers and technological advancements, while other banks face challenges from increased compliance costs. These findings highlight the complex relationship between regulation and competition in banking, emphasizing the need for balanced regulations that promote stability while fostering healthy competition.