Strategic Effects of Regulatory Capital Requirements in Imperfect Banking Competition

Autor/innen

  • Eva Schliephake
  • Roland Kirstein

DOI:

https://doi.org/10.24352/UB.OVGU-2018-430

Schlagworte:

equity regulation, oligopoly, capacity constraint

Abstract

This paper analyses the competitive effects of capital requirement regulation on an oligopolistic credit market. In the first stage, banks choose the structure of refinancing their assets, thereby making an imperfect commitment to a loan capacity as a function of the chosen degree of capitalization and the regulatory capital requirement. In the second stage, loan price competition takes place. It is shown that a capital requirement regulation may not only decrease the supply of credit through an increased marginal cost effect but can have an additional collusive enhancing effect resulting in even higher credit prices and increased profits for the banks.

Veröffentlicht

2018-09-05

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