Premium
TESTING PRICE TAKING IN LOAN AND DEPOSIT MARKETS BY FINANCIAL FIRMS
Author(s) -
Hancock Diana
Publication year - 1986
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1986.tb01121.x
Subject(s) - loan , cash , economics , monetary economics , sample (material) , flexibility (engineering) , business , finance , financial market , capital market , financial system , chemistry , management , chromatography
This paper tests for the failure of price taking in the markets for financial and nonfinancial services. A firm that can purchase or sell an unlimited quantity at the prevailing price is a price taker. This hypothesis is tested using historical data on a sample of eighteen banks, considering financial services, demand deposits, time deposits, labor, cash, materials, and capital. The empirical results indicate little flexibility in the financial technology, whether price taking is imposed on all markets or only on the labor market.