Bank Behavior in Oligopoly, Bank- Clients and Monetary Policy

Eleni Dala, Christos Karpetis and Erotokritos Varelas
Authors registered in the RePEc Author Service: Eleni Dalla

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the impact of monetary policy on the optimal bank behavior under oligopolistic conditions. In addition, we attempt to extend this analysis in the sphere of bank-clients behavior.We concentrate on the way the minimum reserve requirements of commercial banks influence the optimal bank behavior in oligopoly. In particular, we are interested in the influence of this instrument of monetary policy on the interest rate spread. For this reason, we formulate a two-stage Cournot game with scope economies.We conclude that the sign of each change depends on the type of scope economies. Finally, treating an overlapping generation model as a guiding principle, we show that the minimum reserve requirements of commercial banks have an impact on the depositors’ and borrowers’ two periods’ optimal level of consumption.

Keywords: Bank behavior; Scope economics; Monetary policy (search for similar items in EconPapers)
JEL-codes: D4 E44 E51 (search for similar items in EconPapers)
Date: 2013-06-30
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mon
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