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Modeling the Banking Firm Under Perfect Competition Versus Monopoly

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The Industrial Organization of Banking

Part of the book series: Contributions to Finance and Accounting ((CFA))

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Abstract

What is a bank, exactly? All observers agree that a bank is one among several types of financial intermediary that channel funds from savers to entrepreneurs who make capital investments or to individuals who purchase durable goods or tangible assets. Savers who lend funds to financial intermediaries such as banks otherwise could have chosen to engage in direct finance by lending funds to businesses or households without utilizing the intermediaries’ services. Instead, customers of banks opt to engage in indirect finance by lending their funds to banks and other financial intermediaries in exchange for promised flows of returns on those funds. Banks and other intermediaries aim to profit from revenues derived from lending net of costs they incur by engaging in financial intermediation.

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Authors and Affiliations

  1. Baylor University, Waco, TX, USA

    David VanHoose

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  1. David VanHoose
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VanHoose, D. (2022). Modeling the Banking Firm Under Perfect Competition Versus Monopoly. In: The Industrial Organization of Banking. Contributions to Finance and Accounting. Springer, Cham. https://doi.org/10.1007/978-3-031-16241-1_2

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