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- Jena Economic Resea...
- Volume 1
- Do Public Banks hav...
Do Public Banks have a Competitive Advantage?
- Autor(in)
- Erschienen
- 7. Dezember 2007
- Nummer des Discussion-Papers
-
2007-100
- Schlagwort(e)
-
public banks
self-selection
state guarantee
- Zusammenfsg.
-
Private banks often blame state guarantees to distort competition by giving public banks the advantage of lower funding costs. In this paper I show that if borrowers perceive the public bank as supporting economic development, private banks may be able to separate firms by self selection, enter the market, and obtain profits in equilibrium despite their cost disadvantage. The public bank’s competitive advantage may be offset, independently of what its true objective function is. Even perfect competition between private banks does not lead to zero profits.
- article pub. typess JER
- Research article
- article languages JER
- Englisch
- article research fields JER
- economics
- JEL-Classification for JER
- G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages