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Market Structure and the Banking Sector

Author

Listed:
  • Benoit Julien

    (Uastralian Graduate School of Management, School of Economics, and CAER)

  • Pere Gomis-Porqueras

    (University of Miami)

Abstract

We propose a simple framework to explore how different market structures in the banking system affect credit allocation, and how deposits and number of entrepreneurs affect the equilibrium number of banks in the economy. We find that within the Marshallian aggregate surplus perspective, the number of entrants in the banking system is always larger than the socially optimal number of banks.

Suggested Citation

  • Benoit Julien & Pere Gomis-Porqueras, 2007. "Market Structure and the Banking Sector," Economics Bulletin, AccessEcon, vol. 4(24), pages 1-9.
    • Handle: RePEc:ebl:ecbull:eb-06d40019
    as

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    References listed on IDEAS

    as
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    6. Mark G. Guzman, 2000. "Bank structure, capital accumulation and growth: a simple macroeconomic model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 16(2), pages 421-455.
    7. Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(3), pages 393-414.
    8. Smith, R Todd, 1998. "Banking Competition and Macroeconomic Performance," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(4), pages 793-815, November.
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    Keywords

    and Entry;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • G2 - Financial Economics - - Financial Institutions and Services

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