Banking competition, production externalities, and the effects of monetary policy

Banking concentration, financial openness, and financial development

“…As in previous studies with Cournot competition such as Ghossoub and Reed (2015, 2019, 2021) the term in solid brackets represents the extent of market power of a single financial intermediary. More specifically, $$\frac{{b}^{s}}{\left({b}^{s,N}+{b}_{e}^{f}\right)}$$ measures the importance of a banker in financing investment activity by entrepreneurs.…”

“…Thus, the quantitative impact from removing capital restrictions may also depend on banking concentration. Finally, Ghossoub and Reed (2019) demonstrate that the level of capital accumulation in a monetary growth model with production externalities is lower if the degree of concentration is higher. In their framework with Cournot competition in capital markets, banks withhold more resources from the capital sector if the banking system is more concentrated.…”

Capital controls, banking competition, and monetary policy

“…In particular, there exists strong empirical support that higher levels of banking concentration act as a deterrent to capital accumulation (see, for example, Beck et al., 2004; Cetorelli & Gambera, 2001; among others). Moreover, there are a number of theoretical papers that also highlight the effects of banking concentration on investment (Ghossoub & Reed, 2019, 2021; among others). Similar to Ghossoub and Reed (2019, 2021), we develop a framework with Cournot competition in the capital market.…”

“…Moreover, there are a number of theoretical papers that also highlight the effects of banking concentration on investment (Ghossoub & Reed, 2019, 2021; among others). Similar to Ghossoub and Reed (2019, 2021), we develop a framework with Cournot competition in the capital market. However, in contrast to their approach, we analyze the effects of banking concentration in an open economy.…”

Preventing bank panics: The role of the regulator's preferences

“…Based on US call report data, for example, total consolidated assets of the largest three US commercial banks increased from $1.19 trillion, $1.18 trillion and $1.02 trillion on December 31, 2006, to $3.31 trillion, $2.52 trillion and $1.78 trillion on December 31, 2021. See alsoJanicki and Prescott (2006),Ghossoub and Reed (2021) andFernholz and Koch (2021) for the discussion of the increase in bank asset concentration in the US; seeLaeven et al (2014) andGhossoub and Reed (2019), among others, for banking consolidation in other countries.2 SeeCetorelli and Gambera (2001),Beck et al (2004) andDemirgüç-Kunt et al (2004), among others.3 Recent exceptions includeAndolfatto and Nosal (2008),Carletti and Leonello (2019) andGao and Reed (2021), among others.…”