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Stability versus efficiency of the banking sector and economic growth


  • Amable, Bruno
  • Chatelain, Jean-Bernard
  • De Bandt, Olivier


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

Suggested Citation

  • Amable, Bruno & Chatelain, Jean-Bernard & De Bandt, Olivier, 1998. "Stability versus efficiency of the banking sector and economic growth," CEPREMAP Working Papers (Couverture Orange) 9811, CEPREMAP.
  • Handle: RePEc:cpm:cepmap:9811

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    References listed on IDEAS

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    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance


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