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Banking Competition: Implications for Welfare and Monetary Policy

Author

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  • Edgar A. Ghossoub

    () (UTSA)

Abstract

The objective of this manuscript is to study the importance of banking competition in the formulation of monetary policy. While the Friedman rule can be optimal in the presence of perfect competition, it is never the case when the banking system is not competitive. Furthermore, when market power in the banking system is highly distortionary, it is optimal to impose a higher tax on money when the banking system is not competitive.

Suggested Citation

  • Edgar A. Ghossoub, 2013. "Banking Competition: Implications for Welfare and Monetary Policy," Working Papers 0182eco, College of Business, University of Texas at San Antonio.
  • Handle: RePEc:tsa:wpaper:0182eco
    as

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    File URL: http://interim.business.utsa.edu/wps/eco/0027ECO-566-2013.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Banking Competition; Monetary Policy; Welfare Costs; Inflation;

    JEL classification:

    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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