Market structure and the pass-through of the federal funds rate

Robert M. Adams and Dean F. Amel

Journal of Banking & Finance, 2011, vol. 35, issue 5, 1087-1096

Abstract: We study the effect of local market bank concentration on business loan originations and on the pass-through of the federal funds rate to business loan originations. Economic theory on the relationship between concentration and the pass-through of input prices to quantity (or price) is ambiguous. We find that more concentrated markets have lower business loan originations and experience smaller changes in business loan originations in response to changes in the federal funds rate. Our results support the idea that market concentration dampens quantity reactions to input price changes.

Keywords: Market; structure; Monetary; policy; Federal; funds; rate (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (21)

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