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Le rôle de la concurrence dans le secteur financier pour la politique monétaire .
Author(s) -
Ghossoub Edgar A.,
Laosuthi Thanarak,
Reed Robert R.
Publication year - 2012
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/j.1540-5982.2011.01695.x
Subject(s) - economics , competition (biology) , monetary economics , monopoly , market liquidity , monetary policy , interest rate , consumption (sociology) , financial market , demand deposit , private sector , finance , microeconomics , ecology , biology , social science , sociology , economic growth
In this paper, we examine the impact of competition in the banking industry on financial market activity. In particular, we explore this issue in a setting where banks simultaneously insure individuals against liquidity risk and offer loans to promote intertemporal consumption smoothing. In addition, spatial separation and private information generate a transactions role for money. Interestingly, we demonstrate that the industrial organization of the financial system bears significant implications for the effects of monetary policy. Under perfect competition, higher rates of money growth lead to lower interest rates and a higher volume of lending activity. In contrast, in a monopoly banking sector, money growth restricts the availability of funds and raises the cost of borrowing.