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pursue value-decreasing mergers. It can be optimal to overpay for a target firm and decrease shareholder value if the loss is …
Persistent link: https://www.econbiz.de/10014223569
We study the adverse selection problem in imperfectly competitive credit markets and illustrate the circumstances where a separating equilibrium emerges, even without collateral. The borrowers are heterogeneous in their preferences concerning the banks. Separation obtains in market segments...
Persistent link: https://www.econbiz.de/10012721141
This paper presents a model depicting cross-border payment systems as a mixed oligopoly.A private net settlement system …
Persistent link: https://www.econbiz.de/10012933201
We consider the impact of mandatory information disclosure on bank safety in a spatial model of banking competition in which a bank's probability of success depends on the quality of its risk measurement and management systems. Under Basel II capital requirements, this quality is either fully or...
Persistent link: https://www.econbiz.de/10013153603
We establish that the effect of intensified deposit market competition, measured by reduced switching costs, on the probability of bank failures depends critically on whether we focus on competition with established customer relationships or competition for the formation of such relationships....
Persistent link: https://www.econbiz.de/10012997683
We investigate the impact of bank competition on the use of collateral in loan contracts. We develop a theoretical model incorporating information asymmetries in a spatial competition framework where banks choose between screening the borrower and asking for collateral. We show that presence of...
Persistent link: https://www.econbiz.de/10012722372
This paper tests for the existence of market power in banking, using data on demand deposit rates of households and corresponding market rates in five euro area countries. An implicit measure for market power is based on a partial adjustment model that also allows for an asymmetric response of...
Persistent link: https://www.econbiz.de/10013153600
Persistent shifts in equilibria are likely to arise in oligopolistic markets and may be detrimental to the measurement of conduct, related markups and intensity of competition. We develop a cointegrated VAR (vector autoregression) based approach to detect long-run changes in conduct when data...
Persistent link: https://www.econbiz.de/10013158377
This paper tests market power in the banking industry. Price-cost margins predicted by different oligopoly models are … experiment with a number of mergers, each of which involves two major banks, and studying the unilateral effect of the mergers on …
Persistent link: https://www.econbiz.de/10012725375
I calibrate switching cost for the Finnish retail deposit market by using the approach developed by Oz Shy (2002). It turns out that switching costs faced by deposit customers of the main banks are high, ranging from 200 euros to nearly 1,400 euros. Over the past 20 years, switching costs have...
Persistent link: https://www.econbiz.de/10013323983