Bank competition and enterprise restructuring in transition economies
نویسنده
چکیده
We investigate how bank competition a ects the e ciency of credit allocation, using a model of spatial competition. Our analysis shows that bad loans are more likely the larger the number of banks competing for customers. We study further how many banks will be active if market entry is not regulated. Free entry can induce too much entry and thus too many bad loans compared to the social optimum. Finally, we analyze how bank competition a ects the rms' restructuring e ort. We nd that restructuring has positive externalities which give rise to multiple equilibria, with either much or little restructuring activity. Journal of Economic Literature Classi cation Nos.: D43, G21, G34, L13, P31, P34.
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