We model the impact of bank mergers on loan competition, reserve holdings and aggregate liquidity. A merger changes the distribution of liquidity shocks and creates an internal money market, leading to financial cost efficiencies and more precise estimates of liquidity needs. The merged banks...

Despite progress in the past decade, financial markets in Colombia remain relatively small and shallow. In particular the banking system suffers high intermediation costs, which limit constrains access to finance by households and firms. This paper explores some of the causes behind these...

The traditional avoidance literature undeservedly neglects tax base distribution as a factor affecting the avoidance price, and generally assumed to be equal to the avoidance cost. In reality, avoidance providers are usually either high-skilled specialists or insiders. The strong collusion thus,...

We examine the coexistence of banks and financial markets, studyinga credit market where the qualities of investment projects are notobservable and the investment decisions of entrepreneurs are not contractible...

We model the impact of bank mergers on loan competition, reserve holdings and aggregate liquidity. A merger creates an internal money market that affects reserve holdings and induces financial cost advantages, but also withdraws liquidity from the interbank market. Loan market competition...

Interest rate caps, also called usury ceilings, are a widely used policy tool to protect consumers from excessive charges by loan providers. However, they are often cited as a barrier for the advancement of financial inclusion, as they may reduce the incentives to provide loans to lower-income...

Under the Single Supervisory Mechanism (SSM), introduced in 2014, systemically important euro area banks with combined assets of about 21,000 billion euros are directly supervised by the ECB. We examine from a static and a dynamic perspective how this fundamental shift to unified supervision...

We analyse risk-taking behaviour of banks in the context of spatial competition. Banks mobilise unsecured deposits by offering deposit rates, which they invest either in a prudent or a gambling asset. Limited liability along with high return of a successful gamble induce moral hazard at the bank...

In this paper we study the effect on the bank risk-taking behaviour of the passage from the Basle 1 regulation framework to the Basle 2 one, this effect being different according to banks? market power. Our results show that the banks can adopt a pure prudent behaviour only if the capital...

This paper addresses the desirability of competition in banking industry. In a model where banks compete on both deposit and loan markets and where banks can use monitoring technology to control entrepreneurs' behavior, we investigate three questions: what are the effects of competition on...