Optimal capacity in the banking sector and economic growth
The paper investigates, from the welfare and growth point of view, the determination of the optimal capacity of the banking system. For that purpose, we consider an overlapping generation model with endogenous growth. There is horizontal differentiation and imperfect competition in the banking sector. Macro-economic shocks affect the return on capital and, together with the expectations of depositors, condition the stability of the banking sector. We specify to what extent deposit insurance may reduce instability and increase the number of deposits, welfare and growth. We also characterise the conditions under which excess banking capacities may appear and how their reduction may improve welfare.
|Date of creation:||2002|
|Date of revision:|
|Note:||View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00112535|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chan, Yuk-Shee & Greenbaum, Stuart I & Thakor, Anjan V, 1992.
" Is Fairly Priced Deposit Insurance Possible?,"
Journal of Finance,
American Finance Association, vol. 47(1), pages 227-45, March.
- 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.
- Allen Berger & Timothy Hannan, 1994.
"The Efficiency Cost of Market Power in the Banking Industry: A Test of the 'Quiet Life' and Related Hypotheses,"
Center for Financial Institutions Working Papers
94-29, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Allen N. Berger & Timothy H. Hannan, 1998. "The Efficiency Cost Of Market Power In The Banking Industry: A Test Of The "Quiet Life" And Related Hypotheses," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 454-465, August.
- Allen N. Berger & Timothy H. Hannan, 1994. "The efficiency cost of market power in the banking industry: a test of the "quiet life" and related hypotheses," Finance and Economics Discussion Series 94-36, Board of Governors of the Federal Reserve System (U.S.).
- Gali, Jordi, 1995.
"Product diversity, endogenous markups, and development traps,"
Journal of Monetary Economics,
Elsevier, vol. 36(1), pages 39-63, August.
- Gali, Jordi, 1995. "Product Diversity, Endogenous Markups and Development Traps," Working Papers 95-09, C.V. Starr Center for Applied Economics, New York University.
- Qi, Jianping, 1994. "Bank Liquidity and Stability in an Overlapping Generations Model," Review of Financial Studies, Society for Financial Studies, vol. 7(2), pages 389-417.
- Javier Suárez, 1998. "Risk-taking and the prudential regulation of banks," Investigaciones Economicas, Fundación SEPI, vol. 22(3), pages 307-336, September.
- Bordo, Michael D. & Rockoff, Hugh & Redish, Angela, 1996.
"A comparison of the stability and efficiency of the Canadian and American banking systems, 1870–1925,"
Financial History Review,
Cambridge University Press, vol. 3(01), pages 49-68, April.
- Michael D. Bordo & Angela Redish, 1996. "A Comparison of the Stability and Efficiency of the Canadian and American Banking Systems 1870-1925," NBER Historical Working Papers 0067, National Bureau of Economic Research, Inc.
- Frederic S. Mishkin, 2001.
"Prudential Supervision: Why Is It Important and What Are the Issues?,"
in: Prudential Supervision: What Works and What Doesn't, pages 1-30
National Bureau of Economic Research, Inc.
- Frederic S. Mishkin, 2000. "Prudential Supervision: Why Is It Important and What are the Issues?," NBER Working Papers 7926, National Bureau of Economic Research, Inc.
- Allen, Franklin & Gale, Douglas, 2000. "Bubbles and Crises," Economic Journal, Royal Economic Society, vol. 110(460), pages 236-55, January.
- Diamond, Douglas W & Dybvig, Philip H, 1983.
"Bank Runs, Deposit Insurance, and Liquidity,"
Journal of Political Economy,
University of Chicago Press, vol. 91(3), pages 401-19, June.
- Bhattacharya, S. & Boot, A.W.A. & Thakor, A.V., 1995.
"The Economics of Bank Regulation,"
9516, Centro de Estudios Monetarios Y Financieros-.
- Matutes, Carmen & Vives, Xavier, 2000.
"Imperfect competition, risk taking, and regulation in banking,"
European Economic Review,
Elsevier, vol. 44(1), pages 1-34, January.
- Matutes, Carmen & Vives, Xavier, 1995. "Imperfect Competition, Risk Taking, and Regulation in Banking," CEPR Discussion Papers 1177, C.E.P.R. Discussion Papers.
- Casey B. Mulligan & Xavier Sala-i-Martin, 1996.
"Adoption of Financial Technologies: Implications for Money Demand and Monetary Policy,"
NBER Working Papers
5504, National Bureau of Economic Research, Inc.
- 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.
- Keeley, Michael C, 1990. "Deposit Insurance, Risk, and Market Power in Banking," American Economic Review, American Economic Association, vol. 80(5), pages 1183-1200, December.
- Carroll, Christopher D. & Weil, David N., 1994.
"Saving and growth: a reinterpretation,"
Carnegie-Rochester Conference Series on Public Policy,
Elsevier, vol. 40(1), pages 133-192, June.
- Christopher D. Carroll & David N. Weil, 1993. "Saving and growth: a reinterpretation," Working Paper Series / Economic Activity Section 140, Board of Governors of the Federal Reserve System (U.S.).
- Christopher D. Carroll & David N. Weil, 1993. "Saving and Growth: A Reinterpretation," NBER Working Papers 4470, National Bureau of Economic Research, Inc.
- Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
- Diamond, Douglas W, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Wiley Blackwell, vol. 51(3), pages 393-414, July.
- Allen N. Berger & Anil K. Kashyap & Joseph Scalise, 1995.
"The Transformation of the U.S. Banking Industry: What a Long, Strange Trip It's Been,"
Center for Financial Institutions Working Papers
96-06, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Allen N. Berger & Anil K. Kashyap & Joseph M. Scalise, 1995. "The Transformation of the U.S. Banking Industry: What a Long, Strange Trips It's Been," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(2), pages 55-218.
- Paul M Romer, 1999.
"Increasing Returns and Long-Run Growth,"
Levine's Working Paper Archive
2232, David K. Levine.
- Bernard BENSAID & André DE PALMA, 1995. "Politique monétaire et concurrence bancaire," Annales d'Economie et de Statistique, ENSAE, issue 40, pages 161-176.
- Rajan, R.G., 1996. "Why Banks Have a Future: An Economic Rationale," Papers 280, Banca Italia - Servizio di Studi.
- 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.
- E.P. Davis & Sinikka Salo, 1998. "Excess Capacity in EU and US Banking Sectors - Conceptual, Measurement and Policy Issues," FMG Special Papers sp105, Financial Markets Group.
- Gennotte, Gerard & Pyle, David, 1991. "Capital controls and bank risk," Journal of Banking & Finance, Elsevier, vol. 15(4-5), pages 805-824, September.
- 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.
- Matutes, Carmen & Vives, Xavier, 1996. "Competition for Deposits, Fragility, and Insurance," Journal of Financial Intermediation, Elsevier, vol. 5(2), pages 184-216, April.
- John, Kose & John, Teresa A. & Senbet, Lemma W., 1991. "Risk-shifting incentives of depository institutions: A new perspective on federal deposit insurance reform," Journal of Banking & Finance, Elsevier, vol. 15(4-5), pages 895-915, September.
- Brian C. Gendreau & Scott S. Prince, 1986. "The private costs of bank failures: some historical evidence," Business Review, Federal Reserve Bank of Philadelphia, issue Mar, pages 3-14.
When requesting a correction, please mention this item's handle: RePEc:hal:cesptp:halshs-00112535. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.