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 language | English |
|---|---|
| Journal | Economic Modelling |
| DOIs | |
| Publication status | Accepted/In press - 2017 |
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Keywords
- Bank competition
- Cournot competition
- Endogenous growth
- Overlapping generations model
ASJC Scopus subject areas
- Economics and Econometrics
Cite this
Oligopolistic competition in the banking market and economic growth. / Hamada, Kojun; Kaneko, Akihiko; Yanagihara, Mitsuyoshi.
In: Economic Modelling, 2017.Research output: Contribution to journal › Article
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TY - JOUR
T1 - Oligopolistic competition in the banking market and economic growth
AU - Hamada, Kojun
AU - Kaneko, Akihiko
AU - Yanagihara, Mitsuyoshi
PY - 2017
Y1 - 2017
N2 - 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.
AB - 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.
KW - Bank competition
KW - Cournot competition
KW - Endogenous growth
KW - Overlapping generations model
UR - http://www.scopus.com/inward/record.url?scp=85028510941&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85028510941&partnerID=8YFLogxK
U2 - 10.1016/j.econmod.2017.07.017
DO - 10.1016/j.econmod.2017.07.017
M3 - Article
AN - SCOPUS:85028510941
JO - Economic Modelling
JF - Economic Modelling
SN - 0264-9993
ER -