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Imperfect competition and market structure with asymmetric information : the Italian banking sector
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Pavanini, Nicola (2014) Imperfect competition and market structure with asymmetric information : the Italian banking sector. PhD thesis, University of Warwick.
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Official URL: http://webcat.warwick.ac.uk/record=b2751632~S1
Abstract
This thesis studies the relationship between asymmetric information, imperfect competition, and market structure in the Italian banking sector. In three coherently connected chapters it extends and adapts different structural models from the literature in empirical industrial organization to the special case of the credit market, introducing informational asymmetries between lenders and between borrowers and lenders.
The first chapter gives an introductory overview of the thesis, outlying the fundamental contribution of each paper.
In the second chapter, we measure the consequences of asymmetric information in the Italian market for small business lines of credit. We estimate models of demand for credit, loan pricing, loan use, and firm default based on the seminal work of Stiglitz and Weiss [1981]. Preliminary results suggest evidence of asymmetric information, separately identifying adverse selection and moral hazard. We use our results to quantify the impact of asymmetric information on pricing and welfare, and the role imperfect competition plays in mediating these effects.
In the third chapter, we look at whether asymmetric information is a potential determinant of market structure in the banking industry. We measure welfare under different counterfactual scenarios, with and without borrower-lender asymmetric information and reducing incumbents’ informational advantage. We develop a dynamic structural game of banks’ entry, exit and investment with learning by branching based on Weintraub et al. [2008b], together with a static framework of firms’ demand for credit, loan size, default and banks’ pricing, that allows us to identify the effect of asymmetric information on market structure.
In the fourth chapter, we measure the impact of endogenous multi market contact on entry decisions of Italian national banks. We develop a static model of market structure with incomplete information as in Seim [2006], allowing for global players’ heterogeneity and spatial correlation of entry decisions across different local markets. Preliminary results show that multi market contact enhances banks’ profitability, suggesting that it might facilitate implicit collusion as in Bernheim and Whinston [1990].
The fifth chapter concludes, summarizing the main findings and tracing out the directions for future research.
| Item Type: | Thesis (PhD) | ||||
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| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HG Finance |
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| Library of Congress Subject Headings (LCSH): | Banks and banking -- Italy, Competition, Imperfect | ||||
| Official Date: | June 2014 | ||||
| Dates: |
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| Institution: | University of Warwick | ||||
| Theses Department: | Department of Economics | ||||
| Thesis Type: | PhD | ||||
| Publication Status: | Unpublished | ||||
| Supervisor(s)/Advisor: | Crawford, Gregory S. | ||||
| Sponsors: | University of Warwick. Centre for Competitive Advantage in the Global Economy | ||||
| Extent: | xi, 117 leaves : charts | ||||
| Language: | eng |
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