English, Article, Journal or magazine article edition: The Role of Financial Sector Competition for Monetary Policy Edgar A. Ghossoub; Robert Reed; Thanarak Laosuthi

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Bookmark: http://trove.nla.gov.au/version/198336
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • The Role of Financial Sector Competition for Monetary Policy
Author
  • Edgar A. Ghossoub
  • Robert Reed
  • Thanarak Laosuthi
Physical Description
  • preprint
Notes
  • In this paper, we examine the impact of competition in the banking industry on ?nancial market activity. In particular, we explore this issue in a setting where banks simultaneously insure individuals against liquid- ity risk and o¤er loans to promote intertemporal consumption smoothing. In addition, spatial separation and private information generate a trans- actions role for money. Interestingly, we demonstrate that the industrial organization of the ?nancial system bears signi?cant implications for the e¤ects of monetary policy. Under perfect competition, higher rates of money growth lead to lower interest rates and a higher volume of lending activity. In contrast, in a monopoly banking sector, money growth restricts the availability of funds and raises the cost of borrowing.
  • Monetary Policy, Financial Sector Concentration, Price Competition
  • RePEc:tsa:wpaper:0062
Language
  • English
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