Strategic Effects of Regulatory Capital Requirements in Imperfect Banking Competition
AbstractThis paper analyses the competitive effects of capital requirement regulation on an oligopolistic credit market. In the first stage, banks choose the structure of refinancing their assets, thereby making an imperfect commitment to a loan capacity as a function of the chosen degree of capitalization and the regulatory capital requirement. In the second stage, loan price competition takes place. It is shown that a capital requirement regulation may not only decrease the supply of credit through an increased marginal cost effect but can have an additional collusive enhancing effect resulting in even higher credit prices and increased profits for the banks.
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Bibliographic InfoPaper provided by Otto-von-Guericke University Magdeburg, Faculty of Economics and Management in its series FEMM Working Papers with number 100012.
Length: 15 pages
Date of creation: May 2010
Date of revision:
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equity regulation; oligopoly; capacity constraint;
Other versions of this item:
- Eva Schliephake & Roland Kirstein, 2013. "Strategic Effects of Regulatory Capital Requirements in Imperfect Banking Competition," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45, pages 675-700, 06.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-18 (All new papers)
- NEP-BAN-2010-06-18 (Banking)
- NEP-CFN-2010-06-18 (Corporate Finance)
- NEP-COM-2010-06-18 (Industrial Competition)
- NEP-REG-2010-06-18 (Regulation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"Loan Market Competition and Bank Risk-Taking,"
2007-010, Tilburg University, Tilburg Law and Economic Center.
- Roland Kirstein & Matthias Peiss, 2013. "Quantitative Machtkonzepte in der Ökonomik," FEMM Working Papers 130004, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
- Eva Schliephake, 2013. "When Banks Strategically React to Regulation: Market Concentration as a Moderator for Stability," FEMM Working Papers 130012, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
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