Journal article
A Theory of Optimal Bank Size
Oxford economic papers, Vol.44(4), pp.725-749
10/01/1992
DOI: 10.1093/oxfordjournals.oep.a042072
Abstract
A theory of bank size distribution with testable implications is developed. The model is useful for 2 reasons. First, there is a longstanding debate in the banking literature about the market structure of the financial industry. Because the model derives optimal financial contracts from Pareto problems, the allocations that are obtained are necessarily Pareto efficient. Second, the model may prove useful in understanding changes in the European banking system that will undoubtedly result from the European Monetary Union (EMU). The model predicts that largely agricultural sections of the US will have many moderate or small sized banks because these regions are subject to macroeconomic shocks that are difficult to diversify. However, the model predicts money center banks that operate in more economically diverse regions of the country will be larger. These predictions are relevant to the question of the sizes of banks when the EMU begins in 1999.
Details
- Title: Subtitle
- A Theory of Optimal Bank Size
- Creators
- Stefan KrasaAnne Villamil - National Science Foundation
- Resource Type
- Journal article
- Publication Details
- Oxford economic papers, Vol.44(4), pp.725-749
- Publisher
- Oxford Publishing Limited (England)
- DOI
- 10.1093/oxfordjournals.oep.a042072
- ISSN
- 0030-7653
- eISSN
- 1464-3812
- Language
- English
- Date published
- 10/01/1992
- Academic Unit
- Economics
- Record Identifier
- 9984380399702771
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