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Market structure and the pass-through of the federal funds rate

  • Adams, Robert M.
  • Amel, Dean F.
Registered author(s):

    We study the effect of local market bank concentration on business loan originations and on the pass-through of the federal funds rate to business loan originations. Economic theory on the relationship between concentration and the pass-through of input prices to quantity (or price) is ambiguous. We find that more concentrated markets have lower business loan originations and experience smaller changes in business loan originations in response to changes in the federal funds rate. Our results support the idea that market concentration dampens quantity reactions to input price changes.

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    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 35 (2011)
    Issue (Month): 5 (May)
    Pages: 1087-1096

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    Handle: RePEc:eee:jbfina:v:35:y:2011:i:5:p:1087-1096
    Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

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