Optimal capacity in the banking sector and economic growth
AbstractThe paper investigates, from the welfare and growth point of view, the determination of the optimal capacity of the banking system. For that purpose, we consider an overlapping generation model with endogenous growth. There is horizontal differentiation and imperfect competition in the banking sector. Macro-economic shocks affect the return on capital and, together with the expectations of depositors, condition the stability of the banking sector. We specify to what extent deposit insurance may reduce instability and increase the number of deposits, welfare and growth. We also characterise the conditions under which excess banking capacities may appear and how their reduction may improve welfare.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Banking & Finance.
Volume (Year): 26 (2002)
Issue (Month): 2-3 (March)
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Web page: http://www.elsevier.com/locate/jbf
Other versions of this item:
- Bruno Amable & Jean-Bernard Chatelain & Olivier De Bandt, 2002. "Optimal capacity in the banking sector and economic growth," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00112535, HAL.
- Amable, B. & Chatelain, J.-B. & De Bandt, O., 2001. "Optimal Capacity in the Banking Sector and Economic Growth," Working papers 85, Banque de France.
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
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