CONCORRÊNCIA E PERFORMANCE DO SETOR BANCÁRIO EM UM MERCADO HETEROGÊNEO

Caio Fonseca Ferreira and Elizabeth M. M. Q. Farina

Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33th Brazilian Economics Meeting] from ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]

Abstract: Financial markets have become increasingly integrated throughout the world. Does this mean that local financial institutions are becoming irrelevant? We argue that due to the information asymmetries involved in credit concession and banks' role as monitors the answer is no. Motivated by empirical evidences that show a great dispersion among Brazilian banks' interest spreads, we have developed an imperfect competition model where the need to monitor loans and the heterogeneity of demand for credit create market niches in which it is possible to systematically charge higher interest rates on credit. Bank deposits do not need monitoring; thus the tendency to more intense competition. The difference in the level of competition under which these two services operate can generate an inefficient allocation of resources in the economy, particularly harming less developed areas. Volumes of loans and deposits observed in different Brazilian cities and states support the conclusions of the model.

JEL-codes: D21 D43 D61 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-fmk and nep-mic
Date: 2005
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