Can competition in the credit market be excessive?

dc.creator	Caminal, Ramón
dc.creator	Matutes, Carmen
dc.date	2007-11-06T08:52:32Z
dc.date	2007-11-06T08:52:32Z
dc.date	2002-07-01
dc.date.accessioned	2017-01-31T00:58:05Z
dc.date.available	2017-01-31T00:58:05Z
dc.identifier	http://hdl.handle.net/10261/1885
dc.identifier.uri	http://dspace.mediu.edu.my:8181/xmlui/handle/10261/1885
dc.description	We study how market power affects investment and welfare when banks choose between restricting loan sizes and monitoring, in order to alleviate an underlying moral hazard problem. The impact of market power on aggregate welfare is the result of two countervailing effects. An increase in banks' market power results in: (i) higher lending rates, which worsens the borrower's incentive problem and reduces investment by unmonitored firms, (ii) higher monitoring effort, which reduces the proportion of credit-constrained firms. Whenever the second effect dominates, it is optimal to provide banks with some degree of market power.
dc.language	eng
dc.relation	UFAE and IAE Working Papers
dc.relation	527.02
dc.rights	openAccess
dc.subject	Market power
dc.subject	Monitoring
dc.subject	Loan size rationing
dc.subject	Moral hazard
dc.title	Can competition in the credit market be excessive?
dc.type	Documento de trabajo

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