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Monetary Policy and Banking Structure

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  • TARISHI MATSUOKA

Abstract

In this paper, I examine the differences in optimal monetary policy in various banking systems. In particular, I compare two monetary economies: one with a competitive banking system and the other with a monopolistic one. In addition, the optimality of the discount window policy is considered. It is shown that the Friedman rule is the optimal monetary policy in a monopolistic banking economy, and the zero‐inflation policy is optimal in a competitive banking economy under appropriate parameters. In addition, the combination of the Friedman rule and the discount window policy can achieve efficient allocation in both banking systems.

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  • Tarishi Matsuoka, 2011. "Monetary Policy and Banking Structure," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(6), pages 1109-1129, September.
    • Handle: RePEc:wly:jmoncb:v:43:y:2011:i:6:p:1109-1129
    DOI: 10.1111/j.1538-4616.2011.00419.x
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    Cited by:

    1. Varelas, Erotokritos, 2014. "Bank Industry Structure and Public Debt," MPRA Paper 58437, University Library of Munich, Germany.
    2. Edgar A. Ghossoub & Robert R. Reed, 2019. "Banking competition, production externalities, and the effects of monetary policy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 67(1), pages 91-154, February.
    3. Bernardino Adão & André C. Silva, 2021. "Government financing, inflation, and the financial sector," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(4), pages 1357-1396, June.
    4. Lukas Altermatt & Christian Wipf, 2024. "Liquidity, the Mundell–Tobin Effect, and the Friedman Rule," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 56(5), pages 1235-1259, August.
    5. Tetsuo Ono, 2020. "Fiscal rules in a monetary economy: Implications for growth and welfare," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(1), pages 190-219, February.
    6. Edgar A. Ghossoub & Robert R. Reed, 2021. "Banking Competition, Capital Accumulation, And Interest On Reserves," Economic Inquiry, Western Economic Association International, vol. 59(2), pages 671-695, April.
    7. Yasuhiro Yamamoto, 2020. "Less competitive bank markets: Conventional and unconventional monetary policies through bank‐lending channels," International Finance, Wiley Blackwell, vol. 23(2), pages 277-296, August.
    8. Franz Seitz & Markus A. Schmidt, 2014. "Money In Modern Macro Models: A Review of the Arguments," Journal of Reviews on Global Economics, Lifescience Global, vol. 3, pages 156-174.
    9. Erotokritos Varelas, 2015. "Number of Banks, Public Debt, and Workable Competition," Review of Economics & Finance, Better Advances Press, Canada, vol. 5, pages 41-51, February.
    10. Ghossoub, Edgar A. & Reed, Robert R., 2015. "The size distribution of the banking sector and the effects of monetary policy," European Economic Review, Elsevier, vol. 75(C), pages 156-176.
    11. Edgar A. Ghossoub, 2013. "Banking Competition: Implications for Welfare and Monetary Policy," Working Papers 0182eco, College of Business, University of Texas at San Antonio.
    12. Eisei Ohtaki, 2013. "Asymmetric Liquidity Shocks and Optimality of the Freidman Rule," Working Papers e058, Tokyo Center for Economic Research.
    13. Soldatos, Gerasimos T. & Varelas, Erotokritos, 2014. "The Chicago Tradition and Commercial Bank Seigniorage," MPRA Paper 57721, University Library of Munich, Germany.
    14. Liu, Guanchun & Liu, Yuanyuan & Zhang, Chengsi, 2021. "Human capital in the financial sector and corporate debt maturity," China Economic Review, Elsevier, vol. 69(C).
    15. Eisei Ohtaki, 2016. "Optimality of the Friedman rule under ambiguity," Working Papers e103, Tokyo Center for Economic Research.
    16. Eisei Ohtaki, 2023. "Climate change, financial intermediation, and monetary policy," Working Papers e179, Tokyo Center for Economic Research.
    17. Ghossoub, Edgar A., 2023. "Economic growth, inflation, and banking sector competition," Economic Modelling, Elsevier, vol. 129(C).

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