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We consider an imperfectly competitive loan market in which a local relationship lender has an information advantage vis-à-vis distant transaction lenders. Competitive pressure from the transaction lenders prevents the local lender from extracting the full surplus from projects, so that she...
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This paper studies regulatory competition in the banking sector in a model where banks are heterogeneous and taxpayers … strictly regulated country. In this model, regulatory competition in capital standards may lead to a `race to the top' for two …
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