Journal article
Competition Under Credit Rationing: Theory and Evidence from Rural China.
- Abstract:
- We present a duopoly model of financial competition to describe the conditions under which competition leads to greater bank effort when repressed financial systems ration credit. The model features an entrant that freely sets its interest rate, and an incumbent that must charge a rate below that which is market clearing. Both players may exert costly effort to inform themselves about borrower types. Using data on rural financial institutions in China, we test empirically the effects of competition on deposit growth, loan portfolio composition, repayment rates, and other effort measures, finding positive effects of competition on effort and financial performance.
- Publication status:
- Published
- Peer review status:
- Not peer reviewed
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(Preview, Author's original, pdf, 212.9KB, Terms of use)
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- Publisher copy:
- 10.1016/S0304-3878(03)00037-3
Authors
- Publisher:
- Elsevier
- Journal:
- Journal of Development Economics More from this journal
- Volume:
- 71
- Issue:
- 2
- Pages:
- 463 - 495
- Publication date:
- 2003-01-01
- DOI:
- ISSN:
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0304-3878
- Language:
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English
- UUID:
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uuid:ef020b80-fafc-430b-b0fb-aa3ee28f2545
- Local pid:
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oai:economics.ouls.ox.ac.uk:15136
- Deposit date:
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2011-08-16
- ARK identifier:
Terms of use
- Copyright holder:
- Elsevier BV
- Copyright date:
- 2003
- Notes:
- Copyright 2003 Elsevier B.V. All rights reserved. NOTICE: this is the author's version of a work that was accepted for publication in Journal of Development Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Development Economics, 71, 2, (August 2003) DOI#10.1016/S0304-3878(03)00037-3
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