Capital controls, banking competition, and monetary policy.

How do capital controls and banking concentration affect economic development? This paper develops a general equilibrium model to study these important issues. To do so, we construct a framework with heterogeneous agents and imperfectly competitive financial intermediaries who help depositors manage...

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Published in:Economic Inquiry Vol. 62; no. 3; pp. 1369 - 1400
Main Authors: Ghossoub, Edgar A., Harrison, Andre, Reed, Robert R.
Format: Article
Published: Wiley-Blackwell Jul2024
Subjects:
Online Access:View this record in EBSCOhost
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        atl: Capital controls, banking competition, and monetary policy.
      aug:
        au:
          Ghossoub, Edgar A.
          Harrison, Andre
          Reed, Robert R.
        affil:
          Department of Economics, Carlos Alvarez College of Business, University of Texas at San Antonio, San Antonio Texas,, USA
          Department of Economics, College of Liberal Arts, California State University, Long Beach California,, USA
          Department of Economics, Finance and Legal Studies, Culverhouse College of Business, University of Alabama, Tuscaloosa Alabama,, USA
      su:
        Banking industry
        International markets
        Capital controls
        Monetary policy
        Financial institutions
      sug:
        subj:
          Banking industry
          International markets
          Commercial Banking
          Personal and commercial banking industry
          Savings Institutions
          Other Depository Credit Intermediation
          Consumer Lending
          Capital controls
          Monetary policy
          Financial institutions
      keyword:
        banking concentration
        capital controls
        economic development
        liquidity risk
        monetary policy
        banking concentration
        capital controls
        economic development
        liquidity risk
        monetary policy
      ab: How do capital controls and banking concentration affect economic development? This paper develops a general equilibrium model to study these important issues. To do so, we construct a framework with heterogeneous agents and imperfectly competitive financial intermediaries who help depositors manage liquidity risk. Importantly, higher levels of concentration raise the cost of domestic borrowing which increase the reliance on international capital markets. Finally, once the rate of money growth is sufficiently high, capital controls bind and the effects of monetary policy on capital formation are more pronounced.
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    language: English
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