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Bank Behavior in Oligopoly, Bank- Clients and Monetary Policy

Author

Listed:
  • dala, eleni
  • karpetis, christos
  • varelas, erotokritos

Abstract

This paper investigates the impact of monetary policy on the optimal bank behavior under oligopolistic conditions. In addition, we attempt to extend this analysis in the sphere of bank-clients behavior.We concentrate on the way the minimum reserve requirements of commercial banks influence the optimal bank behavior in oligopoly. In particular, we are interested in the influence of this instrument of monetary policy on the interest rate spread. For this reason, we formulate a two-stage Cournot game with scope economies.We conclude that the sign of each change depends on the type of scope economies. Finally, treating an overlapping generation model as a guiding principle, we show that the minimum reserve requirements of commercial banks have an impact on the depositors’ and borrowers’ two periods’ optimal level of consumption.

Suggested Citation

  • dala, eleni & karpetis, christos & varelas, erotokritos, 2013. "Bank Behavior in Oligopoly, Bank- Clients and Monetary Policy," MPRA Paper 47483, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:47483
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    File URL: https://mpra.ub.uni-muenchen.de/47483/1/MPRA_paper_47483.pdf
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    References listed on IDEAS

    as
    1. repec:dgr:rugccs:199909 is not listed on IDEAS
    2. Toolsema, Linda A. & Schoonbeek, L., 1999. "Bank behavior and the interbank rate in an oligopolistic market," Research Report 99E49, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    3. Shota Yamazaki & Hiroaki Miyamoto, 2004. "A Note on Bank Behavior and Monetary Policies in an Oligopolistic Market," Industrial Organization 0408003, University Library of Munich, Germany.
    4. repec:dgr:rugsom:99e49 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bank behavior; Scope economics; Monetary policy;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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