"Imperfect competition in the banking sector and economic instability"

Ce jeudi 15 décembre, le séminaire du LERN accueillera Leonor Modesto, de l'Université Catholique du Portugal, qui présentera l'article "Imperfect competition in the banking sector and economic instability", co-écrit avec Francesco Carlo et Teresa Lloyd-Braga.


 Le résume de l'article est le suivant : 

"The literature identifies good and bad economic effects of bank competition, usually linked to the lower/higher degree of ‘implicit’ credit rationing or higher/lower risk of bank failure.  In this work we highlight a different economic effect of (im)perfect competitionin the banking sector, namely its influence on fluctuations in banking activity and output linked to autonomous volatility in self-fulfilling expectations. 
We  consider  an  OLG  model  with  two  types  of  households:   lenders  who  consume and  work  when  young  and  save  through  bank  deposits  to  finance  consumption  in  old age;  and  entrepreneurs  who  ask  for  a  bank  loan  to  finance  current  consumption  andto  invest  in  a  productive  project  that  will  pay  for  their  second  period  consumption. Banks pay a fee to have a license to operate, face a reserve requirement rate fixed by the monetary authority and solve a profits maximation problem every period under Cournot competition with free entry and exit. We find that more competition in the banking sector facilitates  the  emergence  of  local  indeterminacy  and  sunspots  fluctuations,  promoting therefore macroeconomic instability"

Le séminaire prendra place en salle c 216 à partir de 12h30. Un lien zoom vous sera communiqué prochainement pour celles et ceux souhaitant suivre le séminaire à distance.