Bank competition can affect financial stability in different ways. More competition can lead to riskier behavior by banks, but it can also make them more stable. The study looked at data from over 8,000 banks in 23 developed countries to see how market power and competition impact loan risk, overall bank risk, and equity capital. The results show that banks with more market power tend to have lower overall risk exposure. However, having more market power can also increase the riskiness of a bank's loan portfolio. This risk can be reduced by banks increasing their equity capital.