Are Transition Countries Overbanked? The Effect of Institutions on Bank Market Entry

Christa Hainz

German Economic Review, 2004, vol. 5, issue 2, 237-256

Abstract: Abstract. The popular notion that transition countries are overbanked is challenged in this paper. We study the decision for market entry and the optimal number of banks in a Salop model. We show that the amount of collateral, which is necessary to solve the moral hazard problem of finance, depends on the distance between bank and firm as well as the quality of the institutional environment. We analyze how the number of banks decreases as the institutional environment improves. Moreover, we find that market entry is insufficient because new entrants do not consider thoroughly the positive effects of their entry decision on social welfare.

Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1111/j.1465-6485.2004.00106.x

Related works:
Journal Article: Are Transition Countries Overbanked? The Effect of Institutions on Bank Market Entry (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:germec:v:5:y:2004:i:2:p:237-256

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1465-6485

Access Statistics for this article

German Economic Review is currently edited by Bernhard Felderer, Joseph F. Francois, Ivo Welch, Urs Schweizer and David E. Wildasin

More articles in German Economic Review from Verein für Socialpolitik Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().