EconPapers    
Economics at your fingertips  
 

Banking Technology in a Markov Switching Economy

Apostolos Serletis () and Maksim Isakin

No 2018-18, Working Papers from Department of Economics, University of Calgary

Abstract: We take the user cost approach to modeling the financial firm that maximizes capitalized variable profit to investigate whether the monetary transmission mechanism differs in low and high interest rate environments. We use the panel of U.S. commercial banks from 1992 to 2014 to construct the user costs of financial goods and propose a two-step procedure to estimate a regime-dependent variable profit function in the normalized quadratic semiflexible functional form. We derive demands for and supplies of financial and non-financial goods and provide evidence consistent with neoclassical microeconomic theory. We find several significant differences in the technology of the financial firm across low and high interest rate regimes.

Date: 2018-11-15
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://econ.ucalgary.ca/sites/econ.ucalgary.ca.ma ... f_Macroeconomics.pdf (application/pdf)

Related works:
Journal Article: Banking technology in a Markov switching economy (2019) Downloads
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:clg:wpaper:2018-18

Access Statistics for this paper

More papers in Working Papers from Department of Economics, University of Calgary Contact information at EDIRC.
Bibliographic data for series maintained by Department of Economics ().

 
Page updated 2019-05-21
Handle: RePEc:clg:wpaper:2018-18