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Information production, banking industry structure and credit allocation

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  • CHIESA, GABRIELLA

Abstract

Does the removal of intra-state entry barriers increase welfare? Will all banks survive? Will it lead to a consolidation of the banking industry? The experience of credit market deregulation has not been always successful. Credit market liberalisation, via the removal of entry barriers, of limitations of activity and of markets for funding is generally recognised at the origin of banking crises like the American Savings & Loans, the Scandinavian countries banking crises at the end of the 80 s, the Japanese crises not yet resolved and more recently and on a large scale the East-Asian countries. However there are doubts about whether these problems arose because of liberalization per se or rather because of failure of prudential regulation in disciplining banks whose lenders were protected by deposit insurance and State guarantees. Financial markets integration in Europe is still at too an early stage to evaluate, but certainly the very clear process that has emerged is a consolidation of the banking system. Moreover, such a process appears to take place worldwide and somehow be the response to anticipation of future competition. Berger, Kashyap and Scalise (1995) documents a striking amount of consolidation in the American banking industry over the 1979-94 period and attribute this consolidation to the relaxation of intra-state entry barriers, moreover consolidation was favoured by regulators through the easing of the process for approving mergers. footnote Does a concentrated banking industry dominate a fragmented one? This is the question this paper seeks to address.
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Suggested Citation

  • Chiesa, Gabriella, 1998. "Information production, banking industry structure and credit allocation," Research in Economics, Elsevier, vol. 52(4), pages 409-430, December.
    • Handle: RePEc:eee:reecon:v:52:y:1998:i:4:p:409-430
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    Cited by:

    1. Hyytinen, Ari, 2003. "Information production and lending market competition," Journal of Economics and Business, Elsevier, vol. 55(3), pages 233-253.
    2. Agostino, Mariarosaria & Gagliardi, Francesca & Trivieri, Francesco, 2010. "Credit market structure and bank screening: An indirect test on Italian data," Review of Financial Economics, Elsevier, vol. 19(4), pages 151-160, October.
    3. Chiesa, Gabriella, 2008. "Optimal credit risk transfer, monitored finance, and banks," Journal of Financial Intermediation, Elsevier, vol. 17(4), pages 464-477, October.
    4. Mariarosaria Agostino & Damiano B. Silipo & Francesco Trivieri, 2008. "The Effects of Screening and Monitoring on Credit Rationing of SMEs," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 37(2), pages 155-179, July.
    5. Davide IACOVONI & Alberto ZAZZARO, 2000. "Legal System Efficiency, Information Production, and Technological Choice: A Banking Model," Working Papers 129, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    6. Pietro Alessandrini & Luca Papi & Alberto Zazzaro, 2003. "Banche, territorio e sviluppo," Moneta e Credito, Economia civile, vol. 56(221), pages 3-43.
    7. Holmberg, Ulf, 2012. "The Credit Market and the Determinants of Credit Crunches: An Agent Based Modeling Approach," Umeå Economic Studies 836, Umeå University, Department of Economics.
    8. Mariarosaria Agostino & Francesca Gagliardi & Francesco Trivieri, 2010. "Credit market structure and bank screening," Review of Financial Economics, John Wiley & Sons, vol. 19(4), pages 151-160, October.
    9. Pietro Alessandrini & Luca Papi & Alberto Zazzaro, 2003. "Banks, regions and development," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 56(224), pages 23-55.
    10. Hyytinen, Ari, 2001. "Information Production, Banking Competition and the Market Structure of the Banking Industry," Discussion Papers 749, The Research Institute of the Finnish Economy.
    11. Stefano Colombo, 2017. "Traditional banks, online banks, and number of branches," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 44(2), pages 175-197, June.

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