Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7364912 | Journal of International Financial Markets, Institutions and Money | 2014 | 15 Pages |
Abstract
We propose an oligopsony-oligopoly model to study bank behavior under uncertainty in developing countries and derive a pricing structure that acknowledges joint market power in both the deposit and loan markets. The model identifies two main components to pricing: rent extraction and input costs. We measure the ability of the banking industry to extract rents from the exercise of joint market power using a sample of 103 developing countries. We find that market power rents are economically significant. Also, the role played by the rent extraction share in loan pricing dominates the share of input costs on average.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Walid Marrouch, Rima Turk-Ariss,