Oligopolistic competition in the banking market and economic growth

Kojun Hamada, Akihiko Kaneko and Mitsuyoshi Yanagihara

Economic Modelling, 2018, vol. 68, issue C, 239-248

Abstract: We investigate how banks' degree of imperfect competition affects economic growth. This study explores an imperfect competition model in banking in an overlapping generations model with endogenous growth. We demonstrate the following results. First, an increase in the deposit interest rate increases the steady growth rate of the economy. Second, as competition among banks intensifies, the economic growth rate increases. Third, it is ambiguous as to whether a higher lending interest rate caused by an increase in productivity results in a higher economic growth rate. In our numerical exercises, we exemplify the possibility that an increase in the lending interest rate increases the growth rate.

Keywords: Bank competition; Cournot competition; Endogenous growth; Overlapping generations model (search for similar items in EconPapers)
JEL-codes: D91 D92 E21 E44 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:68:y:2018:i:c:p:239-248

DOI: 10.1016/j.econmod.2017.07.017

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