A Theory of Linkage between Monetary Policy and Banking Failure in Developing Countries
This paper presents a model of the banking sector that maximize profit and an individual bank which is a price taker, in a developing country. The interest rate on treasury bills is included in the model to measure monetary policy. The mathematical expression of the probability of banking failure is calculated; And, I show that, in developing countries, a tightening monetary policy may induce efficient banking failure.
|Date of creation:||Dec 2006|
|Date of revision:||Oct 2007|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
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.:
- Zarruk, Emilio R. & Madura, Jeff, 1992. "Optimal Bank Interest Margin under Capital Regulation and Deposit Insurance," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(01), pages 143-149, March.
- Arena, Marco, 2008.
"Bank failures and bank fundamentals: A comparative analysis of Latin America and East Asia during the nineties using bank-level data,"
Journal of Banking & Finance,
Elsevier, vol. 32(2), pages 299-310, February.
- Marco Arena, 2005. "Bank Failures and Bank Fundamentals: A Comparative Analysis of Latin America and East Asia during the Nineties using Bank-Level Data," Working Papers 05-19, Bank of Canada.
- Patrick Bolton & Xavier Freixas, 2000.
"Corporate finance and the monetary transmission mechanism,"
Economics Working Papers
511, Department of Economics and Business, Universitat Pompeu Fabra.
- Patrick Bolton & Xavier Freixas, 2006. "Corporate Finance and the Monetary Transmission Mechanism," Review of Financial Studies, Society for Financial Studies, vol. 19(3), pages 829-870.
- Bolton, Patrick & Freixas, Xavier, 2001. "Corporate Finance and the Monetary Transmission Mechanism," CEPR Discussion Papers 2892, C.E.P.R. Discussion Papers.
- David C. Wheelock & Paul W. Wilson, 2000.
"Why do Banks Disappear? The Determinants of U.S. Bank Failures and Acquisitions,"
The Review of Economics and Statistics,
MIT Press, vol. 82(1), pages 127-138, February.
- David C. Wheelock & Paul W. Wilson, 1995. "Why do banks disappear? The determinants of U.S. bank failures and acquisitions," Working Papers 1995-013, Federal Reserve Bank of St. Louis.
- Christina D. Romer & David H. Romer, 1990. "New Evidence on the Monetary Transmission Mechanism," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1), pages 149-214.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:5497. 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: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.