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A Quantitative Model of Banking Industry Dynamics

Author

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  • Dean Corbae

    (University of Texas)

  • Pablo D'Erasmo

    (University of Maryland)

Abstract

business cycles, and borrower default frequencies. The model is parameterized to match a set of key aggregate and cross-sectional statistics for the U.S. banking industry. As in the data, the model generates countercyclical interest rates on loans, bank failure rates, borrower default frequencies, and charge-off rates as well as a procyclical loan supply and entry rates. The model can be used to study bank competition and the benefits/costs of policies to subsidize/mitigate bank entry/exit.

Suggested Citation

  • Dean Corbae & Pablo D'Erasmo, 2010. "A Quantitative Model of Banking Industry Dynamics," 2010 Meeting Papers 268, Society for Economic Dynamics.
    • Handle: RePEc:red:sed010:268
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    References listed on IDEAS

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    Cited by:

    1. Priyo, Asad Karim Khan, 2023. "Investigating Excess Reserve Accumulation and Credit Crunch in U.S. Commercial Banks Focusing on the Financial Crisis," MPRA Paper 117851, University Library of Munich, Germany.
    2. Friederike Niepmann, 2013. "Banking across borders with heterogeneous banks," Staff Reports 609, Federal Reserve Bank of New York.
    3. Eduardo Dávila & Ansgar Walther, 2021. "Corrective Regulation with Imperfect Instruments," NBER Working Papers 29160, National Bureau of Economic Research, Inc.
    4. Niepmann, Friederike, 2023. "Banking across borders with heterogeneous banks," Journal of International Economics, Elsevier, vol. 142(C).
    5. Cornelia Kerl & Friederike Niepmann, 2014. "What determines the composition of international bank flows?," Staff Reports 681, Federal Reserve Bank of New York.
    6. Dávila, Eduardo & Walther, Ansgar, 2020. "Does size matter? Bailouts with large and small banks," Journal of Financial Economics, Elsevier, vol. 136(1), pages 1-22.
    7. Alexandru GRIBINCEA & Georgeta GHERGHINA, 2013. "Necessity To Diminish The Giant Banks," ECONOMY AND SOCIOLOGY: Theoretical and Scientifical Journal, Socionet;Complexul Editorial "INCE", issue 3, pages 71-75.

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