Series: IMF Working Papers
Author(s): Gianni De Nicolo , and Marcella Lucchetta
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 May 2009
Keywords: General Equilibrium, Bank Competition, Market Power Rents, Risk, moral hazard, banking, deposit insurance, bank risk, bank capitalization,
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...