Microeconometrics of Banking: Methods, Applications, and Results

Microeconometrics of Banking: Methods, Applications, and Results

Microeconometrics of Banking: Methods, Applications, and Results

Microeconometrics of Banking: Methods, Applications, and Results

Synopsis

This book provides a compendium to the empirical work investigating the hypotheses generated by recent banking theory. Such a compendium is overdue. Since the publication of the The Microeconomics of Banking by Xavier Freixas and Jean Charles Rochet, work in empirical banking has furtherblossomed, not only in sheer volume but also in the variety of questions being tackled, datasets becoming available, and methodologies being introduced. This book follows the structure in Freixas and Rochet's book and arranges the relevant methodologies, applications, and results according to eachof their original chapters in order to have a coherent synthesis between available theory and supporting empirics. Each chapter in Microeconometrics of Banking contains a modest introduction (where possible and appropriate), a concise methodology section with one or more relevant methodologies, andseveral illustrative applications. In a "muscular" results section the authors summarize the main robust and seminal findings in the literature that are in the text, and provide the details of many other studies in figures and tables.

Excerpt

Some books are special. The Microeconomics of Banking by Xavier Freixas and Jean Charles Rochet, its first edition published in 1997, is one of those books. Its elegance and depth in addressing modern banking theory continue to inspire scholars who are interested in empirical research in banking, because no hypotheses testing is possible without a profound knowledge of the existing theoretical frameworks. Freixas and Rochet provide the unchallenged and comprehensive treatment of all key theoretical insights in banking theory.

This book is about the second, empirical “wheel on the bike” that constitutes banking research, in the analogy of research as a two-wheeled vehicle (with a theoretical and an empirical wheel that are both needed for steady forward motion)—a compendium to the “spokes and materials used in this second wheel,” so to say. Such a compendium was overdue. Indeed, since the publication of the Freixas/Rochet book, work in empirical banking has further blossomed, not only in sheer volume but also in the variety of questions that are tackled, data sets that become available, and methodologies that are being fielded.

1. Determining when a field of research started is difficult and ultimately always somewhat fruitless. Modern banking theory and ensuing empirical work find origins in work by Gurley and Shaw (1960), Tobin (1963), Hodgman (1960), Kane and Malkiel (1965), Klein (1971), and Monti (1972), among many others.

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