Reserve requirements and double Bertrand competition among banks

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Abstract

The paper considers a model of double Bertrand competition among banks, in which banks compete for deposits as well as loans. It is shown that the introduction of reserve requirements can have an effect on the existence and efficiency properties of Nash equilibria of this model. This provides a new rationale for imposing reserve requirements on banks.

Original languageEnglish
Pages (from-to)291-293
Number of pages3
JournalApplied Economics Letters
Volume8
Issue number5
Publication statusPublished - May-2001

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