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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Brookings Papers on Economic Activity,
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- Casey B. Mulligan & Xavier Sala-i-Martin, 1995.
"Adoption of financial technologies: Implications for money demand and monetary policy,"
Economics Working Papers
134, Department of Economics and Business, Universitat Pompeu Fabra.
- 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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- Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
- 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.
- Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 393-414.
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- repec:adr:anecst:y:1995:i:40:p:07 is not listed on IDEAS
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