Free Banking and Credit Market Competition – Research Seminar
Tamás Vadász will be the next guest at the Institute of Finance's Regular Research Seminars.
Date: 06 March 2023, Monday, 14:00-15:00 (Budapest time)
Venue: Faculty Club, Theater room (Corvinus main building E, ground floor)
Vadász Tamás: Free Banking and Credit Market Competition
Abstract: We study the impact of informational and behavioural frictions on consumer surplus in banking, on the price of credit, and on the price of checking accounts. We solve a competition model of banking and credit which includes client naivety, heterogeneous client risk, and imperfect risk screening. These features, together, can explain the international pattern of banking costs. In countries where free accounts are prevalent (e.g., US/UK) consumer surplus is non-monotone in private information, while reducing the amount of naivety improves consumer surplus. Where free-banking is not prevalent (e.g., France/Germany), these results do not necessarily hold.
Please note that this Teams link is only in case you are unable to join the seminar in the Corvinus University of Budapest, Faculty Club, Theater room. However, the meeting will be generally held offline.