Optimal Capacity in the Banking Sector and Economic Growth

Bruno Amable, Jean-Bernard Chatelain and Olivier de Bandt

Working papers from Banque de France

Abstract: The paper investigates, from the welfare and growth point of view, the determination of the optimal capacity of the banking system. For that purpose, we consider an overlapping generation model with endogenous growth. There is horizontal differentiation and imperfect competition in the banking sector. Macroeconomic shocks affect the return on capital and, together with the expectations of depositors, condition the stability of the banking sector. We specify to what extent deposit insurance may reduce instability and increase the number of deposits, welfare and growth. We also characterize the conditions under which excess banking capacities may appear and how their reduction may improve welfare.

Keywords: Deposit insurance; imperfect; competition; growth, banking. (search for similar items in EconPapers)
JEL-codes: G21 O16 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2001
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Optimal capacity in the banking sector and economic growth (2002)
Working Paper: Optimal capacity in the banking sector and economic growth (2002)
Working Paper: Optimal capacity in the banking sector and economic growth (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:85

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