Monopoly versus Competition in Banking: Some Implications for Growth and Welfare
AbstractWe consider how the industrial organization of the financial system affects an economy's macroeconomic performance. In particular, we compare two otherwise identical monetary economies -- one with a competitive and the other with a monopolistic banking system -- along the dimensions of bank liquidity provision, asset allocation, savings behavior, long-run real growth, and depositor welfare. We find that monopoly in banking can potentially be growth promoting. However, the relative performance of the two banking systems depends crucially on the level of nominal interest rate.
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Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2005 Meeting Papers with number 435.
Date of creation: 2005
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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Web page: http://www.EconomicDynamics.org/society.htm
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Other versions of this item:
- Beatrix Paal & Bruce Smith & Ke Wang, 2013. "Monopoly versus Competition in Banking: Some Implications for Growth and Welfare," Annals of Economics and Finance, Society for AEF, vol. 14(3), pages 871-910, December.
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
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- Tarishi Matsuoka, 2011. "Monetary Policy and Banking Structure," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(6), pages 1109-1129, 09.
- Carlos Gustavo Machicado, 2007. "Growth and Banking Structure in a Partially Dollarized Economy," Development Research Working Paper Series 02/2007, Institute for Advanced Development Studies.
- Ghossoub, Edgar A., 2012. "Liquidity risk and financial competition: Implications for asset prices and monetary policy," European Economic Review, Elsevier, vol. 56(2), pages 155-173.
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