Khemraj, Tarron (2010): The simple analytics of oligopoly banking in developing economies. Forthcoming in: Journal of Business, Finance and Economics in Emerging Economies
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Previous studies have documented the tendency for the commercial banking sector of many developing economies to be highly liquid and be characterised by a persistently high interest rate spread. This paper embeds these stylised facts in an oligopoly model of the banking firm. The paper derives both the loan and deposit rates as a mark up rate over a relatively safe foreign interest rate. Then, using a diagrammatic framework, the paper provides an analysis of: (i) the distribution of financial surplus among savers, business borrowers and banks; (ii) exogenous deposit shocks; (iii) exogenous loan demand shocks; and (iv) the impact of interest rate control on financial intermediation.
|Item Type:||MPRA Paper|
|Original Title:||The simple analytics of oligopoly banking in developing economies|
|Keywords:||Oligopoly, commercial banks, developing economies, distribution|
|Subjects:||D - Microeconomics > D3 - Distribution > D30 - General
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E40 - General
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages
|Depositing User:||Tarron Khemraj|
|Date Deposited:||21. Apr 2010 21:56|
|Last Modified:||18. Feb 2013 19:30|
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