Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/189537
Authors: 
Machicado, Carlos Gustavo
Year of Publication: 
2007
Series/Report no.: 
Development Research Working Paper Series 02/2007
Abstract: 
This article illustrates how the industrial organization of a banking system affects economic growth in a partially dollarized economy. I study a model where banking competition has some potentially good and some potentially bad effects for growth. I analyze how important they are quatitatively and, surprisingly, they do not seem to matter much. The main reason for this is that while competition leads banks to offer consumers a "better deal" on their deposits, this does not lead to a large increase in the savings rate. The effect depends on the main structural parameter values of the economy. In particular, if there is a high demand for liquidity insurance. I calibrate the model for the Bolivian economy and show that the growth rates under both systems are not significantly different.
Subjects: 
General equilibrium and growth
Dollarization
Banking
Industrial Organization
JEL: 
D50
F31
G21
L10
Document Type: 
Working Paper

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