Regulation &amp; oligopoly in banking: The role of banking cost structure

Dalla, Eleni; Varelas, Erotokritos

doi:10.1016/j.jeconbus.2019.02.002

Cited by 5 publications

(4 citation statements)

References 18 publications

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“…In the first stage, banks take deposits from surplus units to be then channeled to deficit units in the second stage. Likewise the approach wielded by Dalla and Varelas (2019), our model also gives due consideration to scope economies based on the prevalence of certain cost benefits which accrue to banks when they engage into their financial intermediation activities. Our standard inverse loan demand curve is described below:…”

Section: Layout Of the Model Structure For The Banksmentioning

confidence: 99%

“…Our final analysis employed real world data which is then applied to our model. γ and η are set to 0.3 and 0.7, close to the values employed by Dalla and Varelas (2019) in the case of Europe. λ and F values become more complicated to be set as no research has been done to directly disentangle the repercussions of ageing population on the cost of loans or on the cost of deposits.…”

Section: Calibration Of the Model To Real World Datamentioning

confidence: 99%

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Demographical structural change and Bank’s Interest rate spread

Ramlall

2023

Preprint

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This paper contributes to the literature dealing with ageing population and banks by modeling the impact of ageing population on bank’s interest rate spread. Findings disclose that five key forces determine the interest rate spreads of banks, namely, scope economies, ageing population impacts both on the price and level of loans and on the price and level of deposits. The validity of the model is substantiated through different tests with real world calibrated data depicting a rather difficult state of banks following rising old age dependency ratio. Policy-wise banks should strive to accomplish higher scope economies by tapping on more technology-driven services such as metaverse, online delivery of services and sharing economy, all geared towards bolstering the economic health of banks in light of such a phenomenon.

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Section: Layout Of the Model Structure For The Banksmentioning

confidence: 99%

Section: Calibration Of the Model To Real World Datamentioning

confidence: 99%

Demographical structural change and Bank’s Interest rate spread

Ramlall

2023

Preprint

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“…Changes in borrowers' credit ratings may alter the risk weights on bank loans under regulations requiring ratings-contingent capital, which may have an immediate impact on the capital requirements of lending banks and the cost of the bank's financial intermediation [15]. Paper [16] examined the effects of banking laws on the ethical behavior of commercial banks with a focus on the regulatory ramifications of the banking cost structure. According to the study on shadow banking, [17] the ability of banks to save expenses is improved by using shadow banks to help find ways around the rigorous limitations on their operations and product choices.…”

Section: Introductionmentioning

confidence: 99%

The Role of Cost of Loan in Banking Loan Dynamics: Bifurcation and Chaos Analysis

Ansori

Khabibah²

2022

BAREKENG: J. Math. & App.

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The gradient adjustment process is used to create a dynamic model of banking loan. The sign of the loan’s marginal profit determines how much money will be loaned in the future. In this research, using bifurcation theory, we investigate the cost of loan in the dynamics of a bank’s loan. The results of the analysis indicate that the stability of the loan equilibrium might be impacted by the cost of loan. Loan equilibrium may become unstable through transcritical bifurcation if the cost of the loan is sufficiently high. The loan equilibrium may become unstable through flip bifurcation and path to chaos, however, if the cost of loan is too low. If the cost of loan lies between the bifurcation values, the loan equilibrium is stable. The numerical simulations back up these conclusions. Additionally, we display the Lyapunov exponent graph, which shows the presence of chaos, and the chaotic loan graph, which is sensitive to the initial condition.

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“…Under ratings-contingent capital regulation, changes in borrowers' credit ratings may change the risk weights on bank loans, which might have an immediate effect on the capital needs of lending banks and the cost of financial intermediation of the bank [15]. Examining the impact of banking regulations on commercial banks' ideal conduct, [16] paid particular attention to the regulatory implications of the banking cost structure. In the study on shadow banking, [17] argued that shadow banks assist in identifying ways to get over the stringent restrictions on bank operations and product selection, enhancing banks' capacity to reduce costs.…”

Section: Introductionmentioning

confidence: 99%

Analysis of Banking Deposit Cost in the Dynamics of Loan: Bifurcation and Chaos Perspectives

Ansori

Hariyanto²

2022

BAREKENG: J. Math. & App.

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A dynamic model of banking loan based on the gradient adjustment process is presented. The amount of loan that will be channeled in the future depends on the sign of the marginal profit of loan. In this paper, we study the deposit cost in the dynamics of a bank’s loan using bifurcation theory. The analysis shows that the deposit cost can affect the stability of loan equilibrium. If the deposit cost is too high, then the loan equilibrium can lose its stability trough transcritical bifurcation. Meanwhile, if the deposit cost is too low, then the loan equilibrium may lose its stability via flip bifurcation and road to chaos. The loan equilibrium stable if the deposit cost is in between the bifurcation values. These findings are confirmed by the numerical simulations. In addition, we present the graph of Lyapunov exponent to see the existence of chaos and the graph of chaotic loan that is sensitive to the initial condition.

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Regulation & oligopoly in banking: The role of banking cost structure

Cited by 5 publications

References 18 publications

Demographical structural change and Bank’s Interest rate spread

Demographical structural change and Bank’s Interest rate spread

The Role of Cost of Loan in Banking Loan Dynamics: Bifurcation and Chaos Analysis

Analysis of Banking Deposit Cost in the Dynamics of Loan: Bifurcation and Chaos Perspectives

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