Financial Intermediation and Deposit Contracts: A Strategic View

Arbeitspapier

This paper investigates competition among financial intermediaries in a finite-trader version of the Diamond and Dybvig (1983) economy under no aggregate uncertainty. The economy is populated by self-interested financial intermediaries that compete strategically over deposit contracts offered to consumers. Both exclusive and nonexclusive competition perspective are considered, in both cases multiple equilibria arise if banks do not have an initial endowment. When financial intermediaries have a sufficient level of endowment, regardless the competition perspective adopted, the first best allocation is the unique equilibrium allocation.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economics Working Paper Series ; No. 15/213

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Subject: financial intermediation ; deposit contracts

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Larocca, Vittorio
• Event: Veröffentlichung
• (who): ETH Zurich, CER-ETH - Center of Economic Research
• (where): Zurich
• (when): 2015

Further information

• DOI: doi:10.3929/ethz-a-010427309
• Handle: http://hdl.handle.net/10419/171656