Journal of Money, Credit & Banking

Reports major findings in the study of financial institutions, financial markets, monetary and fiscal policy, credit markets, money and banking.

Articles from Vol. 36, No. 3, June

Bank Competition and Access to Finance: International Evidence
WHILE THE RECENT empirical literature provides empirical evidence on the positive role of the banking sector in enhancing economic growth through more efficient resource allocation, less emphasis has been put on the structure of the banking system....
Bank Concentration and Competition: An Evolution in the Making
BANKS MOBILIZE, ALLOCATE, and invest much of society's savings, so bank performance has substantive repercussions on capital allocation, firm growth, industrial expansion, and economic development. (1) Thus, research on the effects of bank concentration...
Comment on "Bank Competition and Access to Finance: International Evidence" by Thorsten Beck, Asli Demirguc-Kunt, and Vojislav Maksimovic
JEL codes: G21, L10 Keywords: bank competition, bank concentration, financing obstacles. There are two commonly acknowledged, albeit conflicting predictions on the effect of banks' market power on firms' access to credit. The structure-performance...
Comment on "Competition and Financial Stability" by Franklin Allen and Douglas Gale
JEL codes: G28, E44, L51 Keywords: financial contagion, banking regulation. Allen and Gale (2004, this issue of JMCB) provide a thought-provoking tour d'horizon. I'd call it "ambitious," except that what they label a "prelude to the development...
Comment on "Crises in Competitive versus Monopolistic Banking Systems" by John H. Boyd, Gianni De Nicolo, and Bruce D. Smith
JEL codes: E50, G21 Keywords: banking crisis (panic), monetary equilibrium. This paper (Boyd, De Nicolo, and Smith 2004, this issue of JMCB) is intended as a contribution to the now-burgeoning literature on the causes and effects of banking crises....
Comment on "How Foreign Participation and Market Concentration Impact Bank Spreads: Evidence from Latin America" by Maria Soledad Martinez Peria and Ashoka Mody
JEL codes: G21, G34, N26 Keywords: Latin America, banks, mergers and acquisitions. During most of the 20th century, Latin American banking systems tended to be small, inefficient, and highly concentrated. Most were also characterized by regulatory...
Comment on "Real Effects of Bank Competition" by Nicola Cetorelli
JEL codes: L2, G2, G3 Keywords: banking, industry structure. Cetorelli (2004, this issue of JMCB) examines the relationship between bank concentration and (nonfinancial) industrial structure. This paper forms part of an interesting research agenda...
Comment on "Regulations, Market Structure, Institutions, and the Cost of Financial Intermediation" by Asli Demirguc-Kunt, Luc Laeven, and Ross Levine
JEL codes: G21, O40 Keywords: law and finance, financial intermediation. "Regulations, Market Structure, Institutions, and the Cost of Financial Intermediation," by Demirguc-Kunt, Laeven, and Levine (2004, this issue of JMCB) offers another piece...
Comment on "What Drives Bank Competition? Some International Evidence" by Stijn Claessens and Luc Laeven
JEL codes: G21, L13, C51 Keywords: banking, competitions, Rosse-Panzar. The question of bank competition is vitally important for a number of reasons. The essential role of bank credit and other financial services as an input in the production...
Competition and Financial Stability
IN THE BANKING SECTOR, unlike other sectors of the economy, competition policy must take account of the interaction between competition and financial stability. Greater competition may be good for (static) efficiency, but bad for financial stability....
Crises in Competitive versus Monopolistic Banking Systems
BANKING PANICS AND crises have been relatively frequent and costly events. In the U.S., for instance, banking panics occurred in 1819, 1837, 1857, 1873, 1893, 1907, and 1930-33. These crises were not only frequent but nearly always were associated...
How Foreign Participation and Market Concentration Impact Bank Spreads: Evidence from Latin America
The market structure of the banking industry in many developing countries has recently undergone significant changes. In particular, the ongoing and, often, extensive entry of foreign banks has been the sournce of a far-reaching transformation. Between...
Is There a Positive Relationship between Stock Market Volatility and the Equity Premium?
To the extent that aggregate risk in the stock market is captured by the conditional variance of the return on a market portfolio, it seems reasonable to expect a positive empirical relationship between market volatility and the equity premium. (1)...
Majority Rule, Consensus Building, and the Power of the Chairman: Arthur Burns and the FOMC
In many countries, including the United States, monetary policy decisions are made by a committee, not by an individual with a well-defined linear quadratic preference function. This institutional "detail" may--and probably does--have important behavioral...
Monetary Policy and Stagflation in the UK
On November 17, 1965, Iain Macleod, the spokesman on economic issues for the United Kingdom's Conservative Party, spoke in the House of Commons on the state of the UK economy: We now have the worst of both worlds--not just inflation on the one side...
Real Effects of Bank Competition
THIS PAPER ANALYZES the effect of bank deregulation and bank concentration on the market structure of nonfinancial sectors. The focus on Europe is justified by the significant structural changes of the banking industry witnessed in European Union (EU)...
Regulations, Market Structure, Institutions, and the Cost of Financial Intermediation
THIS PAPER ASSESSES the impact of bank regulations, market structure, and national institutions on the cost of intermediation as measured by bank net interest margins and bank overhead expenditures. Banks mobilize and allocate society's savings, and...
Rounding Error: A Distorting Influence on Index Data
ECONOMETRIC TECHNIQUES to estimate models with errors in variables have been well developed and have a long history (Lindley, 1947, Madansky, 1959). Nevertheless, most researchers tend to assume that data are measured without error. Providing historical...
The Great Depression and Output Persistence: A Reply to Papell and Prodan
JEL codes: C22, E32 Keywords: business cycle, unit root, Great Depression. IN A LETTER to this journal, Papell and Prodan (2004a), hereafter PP, conduct unit root tests for annual U.S. real GDP, 1870-1998, that allow for off-setting level shifts...
The Nonlinear Phillips Curve and Inflation Forecast Targeting: Symmetric versus Asymmetric Monetary Policy Rules
THE 1990S saw the introduction of explicit inflation targets for monetary policy in a number of countries viz. Australia, New Zealand, Canada, the United Kingdom, Sweden, Finland, and Spain. Inflation targeting has been introduced as a way of further...
The Response of Term Rates to Fed Announcements
Look, the main issue here is that, as far as I am concerned, I would like us to be counted. We are the central bank and we are making a major move. --Chairman Greenspan, Transcript of the Federal Open Market Committee Meeting, February 3-4, 1994. ...
The Uncertain Unit Root in U.S. Real GDP: Evidence with Restricted and Unrestricted Structural Change
JEL codes: C22, E32 Keywords: unit root, structural change, real GDP. THE TREND-STATIONARY MODEL, where business cycles were modeled as stationary fluctuations around a linear deterministic trend, was the canonical representation of aggregate...
What Drives Bank Competition? Some International Evidence
COMPETITION IN THE financial sector matters for a number of reasons. As in other industries, the degree of competition in the financial sector can matter for the efficiency of the production of financial services, the quality of financial products,...