(Gabaix, 2011) for the banking sector, introducing Bertrand competition and heterogeneous banks charging variable markups …. Using this framework, we show conditions under which idiosyncratic shocks to bank lending can generate aggregate … sector for many countries is indeed granular, as the right tail of the bank size distribution follows a power law. We then …

contribution is two-fold. First, we expand the theory of granularity to encompass the Bertrand competition frequently used in … right tail of the bank size distribution follows a power law. Also, the presence of big banks as measured by high market …