Sequential Models of Bertrand Competition for Deposits and Loans under Asymmetric Information
This paper analyzes sequential games of double-sided Bertrand competition in the deposit and credit markets, when banks are free to reject customers and cannot distinguish among borrowers. The timing of competition is crucial when customers apply once. Interest rates are pushed upwards when the deposit market is the first to be visited, whereas rates are submitted to downward pressures otherwise. With multiple applications, the order of competition does not matter. Multiple applications in one market weaken competition in that market and generate outcomes similar to the case when this market is visited in a second stage in the single-application framework.
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| Length: | 50 pages |
| Date of creation: | Sep 2002 |
| Date of revision: | |
| Handle: | RePEc:kee:kerpuk:2002/15 |
| Note: | Revised version of F. Bracoud (1999), Bertrand Competition for Deposits and Loans under Asymmetric Information: Stiglitz andWeiss Revisited, mimeo, Liverpool Research Papers in Economics, Finance and Accounting 9901. |
| Contact details of provider: | Postal: Department of Economics, University of Keele, Keele, Staffordshire, ST5 5BG - United Kingdom Phone: +44 (0)1782 584581 Fax: +44 (0)1782 717577 Web page: http://www.keele.ac.uk/depts/ec/cer/ Email: More information through EDIRC
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| Order Information: | Postal: Centre for Economic Research, Research Institute for Public Policy and Management, Keele University, Staffordshire ST5 5BG - United Kingdom Web: http://www.keele.ac.uk/depts/ec/cer/pubs_kerps.htm Email: |
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.:
- Marie-Odile Yanelle, 1997. "Banking Competition and Market Efficiency," Review of Economic Studies, Oxford University Press, vol. 64(2), pages 215-239.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Yanelle, Marie-Odile, 1989. "The strategic analysis of intermediation," European Economic Review, Elsevier, vol. 33(2-3), pages 294-301, March.
- Bhattacharya Sudipto & Thakor Anjan V., 1993. "Contemporary Banking Theory," Journal of Financial Intermediation, Elsevier, vol. 3(1), pages 2-50, October.
- Frederique Bracoud, 1999. "Bertrand Competition For Deposits And Loans Under Asymmetric Information: Stiglitz And Weiss Revisited," Research Papers 1999_01, University of Liverpool Management School.
- Daniel F. Spulber, 1996. "Market Microstructure and Intermediation," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 135-152, Summer.
- Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, December.
- Santomero, Anthony M, 1984. "Modeling the Banking Firm: A Survey," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 16(4), pages 576-602, November.
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