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Endogenous Product Differentiation in Credit Markets: What do Borrowers Pay for?

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  • Kim, M.
  • Kristiansen, E.G.
  • Vale, B.

Abstract

This paper studies strategies pursued by banks in order to differentiate their services from those of their rivals. In that way competition among banks is softened. More specifically we analyze if the bank size, the banks ability to avoid losses,and its capital ratio can be used as strategic variabl es to make banks different and increase the interest rates banks can charge their borrowers in equilibrium.

Suggested Citation

  • Kim, M. & Kristiansen, E.G. & Vale, B., 2001. "Endogenous Product Differentiation in Credit Markets: What do Borrowers Pay for?," Papers 27/2001, Norwegian School of Economics and Business Administration-.
    • Handle: RePEc:fth:norgee:27/2001
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    More about this item

    Keywords

    COMPETITION ; BANKS ; INTEREST;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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