Article ID Journal Published Year Pages File Type
7356583 Journal of Banking & Finance 2018 49 Pages PDF
Abstract
We present evidence that government-controlled banks (GCBs) significantly increased their lending to small and medium-sized enterprises (SMEs) whose main bank was a large bank in the 2008-09 financial crisis. Further analyses show that the weak relationship between large banks and SMEs is a major cause for this phenomenon. The mixed Cournot oligopoly model with relationship banking, where profit-maximizing private banks and a welfare-maximizing GCB coexist, shows that this finding is consistent with the welfare maximization by a GCB rather than its own profit maximization.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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