Financial Intermediation, Competition, and Risk: A General Equilibrium Exposition PDF Download

Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Financial Intermediation, Competition, and Risk: A General Equilibrium Exposition PDF full book. Access full book title Financial Intermediation, Competition, and Risk: A General Equilibrium Exposition by Gianni De Nicoló. Download full books in PDF and EPUB format.

Financial Intermediation, Competition, and Risk: A General Equilibrium Exposition

Financial Intermediation, Competition, and Risk: A General Equilibrium Exposition PDF Author: Gianni De Nicoló
Publisher: INTERNATIONAL MONETARY FUND
ISBN: 9781451872521
Category :
Languages : en
Pages : 29

Get Book Here

Book Description
We study a simple general equilibrium model in which investment in a risky technology is subject to moral hazard and banks can extract market power rents. We show that more bank competition results in lower economy-wide risk, lower bank capital ratios, more efficient production plans and Pareto-ranked real allocations. Perfect competition supports a second best allocation and optimal levels of bank risk and capitalization. These results are at variance with those obtained by a large literature that has studied a similar environment in partial equilibrium. Importantly, they are empirically relevant, and demonstrate the need of general equilibrium modeling to design financial policies aimed at attaining socially optimal levels of systemic risk in the economy.