Oligopolistic competition in the banking market and economic growth

Kojun Hamada, Akihiko Kaneko, Mitsuyoshi Yanagihara

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)

Abstract

We investigate how banks’ degree of imperfect competition affects economic growth. This study explores an imperfect competition model in banking in an overlapping generations model with endogenous growth. We demonstrate the following results. First, an increase in the deposit interest rate increases the steady growth rate of the economy. Second, as competition among banks intensifies, the economic growth rate increases. Third, it is ambiguous as to whether a higher lending interest rate caused by an increase in productivity results in a higher economic growth rate. In our numerical exercises, we exemplify the possibility that an increase in the lending interest rate increases the growth rate.

Original languageEnglish
Pages (from-to)239-248
Number of pages10
JournalEconomic Modelling
Volume68
DOIs
Publication statusPublished - 2018 Jan

Keywords

  • Bank competition
  • Cournot competition
  • Endogenous growth
  • Overlapping generations model

ASJC Scopus subject areas

  • Economics and Econometrics

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