Stability versus efficiency of the banking sector and economic growth
The paper investigates, from the welfare and growth point of view, the existence of a trade-off between the stability and the efficiency of the banking system, studying the costs and benefits of regulatory programs. Welfare is considered in the context of an overlapping generation model with endogenous growth. There is horizontal differentiation and imperfect competition in the banking sector. Macroeconomic shocks affect the return on capital. We specify how deposit insurance may increase the number of deposits, welfare and growth. We characterize the conditions under which excess banking capacity may appear and how its reduction may improve welfare
|Date of creation:||1998|
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- Mulligan, Casey B & Sala-i-Martin, Xavier, 1996. "Adoption of Financial Technologies: Implications for Money Demand and Monetary Policy," CEPR Discussion Papers 1358, C.E.P.R. Discussion Papers.
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"The Transformation of the U.S. Banking Industry: What a Long, Strange Trip It's Been,"
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96-06, Wharton School Center for Financial Institutions, University of Pennsylvania.
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" Is Fairly Priced Deposit Insurance Possible?,"
Journal of Finance,
American Finance Association, vol. 47(1), pages 227-45, March.
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"Increasing Returns and Long-run Growth,"
Journal of Political Economy,
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"Saving and Growth: A Reinterpretation,"
NBER Working Papers
4470, National Bureau of Economic Research, Inc.
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- Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 393-414.
- Matutes, Carmen & Vives, Xavier, 1996. "Competition for Deposits, Fragility, and Insurance," Journal of Financial Intermediation, Elsevier, vol. 5(2), pages 184-216, April.
- Besanko, David & Thakor, Anjan V., 1992. "Banking deregulation: Allocational consequences of relaxing entry barriers," Journal of Banking & Finance, Elsevier, vol. 16(5), pages 909-932, September.
- Bordo, Michael D. & Rockoff, Hugh & Redish, Angela, 1994. "The U.S. Banking System From a Northern Exposure: Stability versus Efficiency," The Journal of Economic History, Cambridge University Press, vol. 54(02), pages 325-341, June.
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- Williamson, Stephen D, 1987. "Transactions Costs, Inflation, and the Variety of Intermediation Services," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 19(4), pages 484-98, November.
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