Essays on financial stability and the industrial organization of the banking system

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dc.contributorGivens, Gregory E.
dc.contributorPierce, Joshua R.
dc.contributorJindapon, Paan
dc.contributorSun, Min
dc.contributor.advisorReed, Robert R.
dc.contributor.authorGao, Jiahong
dc.contributor.otherUniversity of Alabama Tuscaloosa
dc.date.accessioned2020-09-30T17:25:15Z
dc.date.available2020-09-30T17:25:15Z
dc.date.issued2020
dc.descriptionElectronic Thesis or Dissertationen_US
dc.description.abstractThe focus of my dissertation is to study how the industrial organization of the banking sector affects the risk-taking behavior of financial intermediaries and the degree of instability within the banking system. In the first chapter, I ask whether the notion that market concentration promotes stability survives when the government intervention during a crisis is properly taken into account. To this end, I study suspension policies in an environment without commitment, following Ennis and Keister (2009). When the BA only values the welfare of depositors, the degree of fragility is independent of the competitive structure of the banking system. However, having a BA that puts some weight on the monopolist’s welfare can serve as a commitment device in suspending payments earlier to protect bank profits, which reduces fragility under a monopoly. The second chapter investigates how the industrial organization of the banking sector may be associated with different triggers for the system to be unstable. In particular, my analysis is based on a modern version of the Diamond and Dybvig (1983) framework in which a self-fulfilling run occurs at a non-trivial probability and banks lack commitment in determining the structure of liabilities as in Ennis and Keister (2010). I find that the possibility that the monopolistic bank may lose its rents in times of stress encourages it to be relatively illiquid. As a result, a monopoly is more stable (fragile) than perfect competition if the ex-ante probability of a financial crisis is below (above) some threshold. The last chapter examines the effects of bank failures and market concentration on credit market activity across United States. In particular, I employ a recent 17-year panel of all FDIC-insured commercial banks over the period 1994Q3 to 2010Q4 and construct state-specific measures of bank failures and deposit concentration. Using a seemingly unrelated regressions (SUR) model, I find that over the full sample, banks issued less loans if the likelihood of a bank failure in a given state increased. Further, banks in states with higher degrees of concentration also issued less loans. Interestingly, there appears evidence that market concentration serves as a buffer against instability.en_US
dc.format.extent209 p.
dc.format.mediumelectronic
dc.format.mimetypeapplication/pdf
dc.identifier.otheru0015_0000001_0003648
dc.identifier.otherGao_alatus_0004D_14099
dc.identifier.urihttp://ir.ua.edu/handle/123456789/7047
dc.languageEnglish
dc.language.isoen_US
dc.publisherUniversity of Alabama Libraries
dc.relation.hasversionborn digital
dc.relation.ispartofThe University of Alabama Electronic Theses and Dissertations
dc.relation.ispartofThe University of Alabama Libraries Digital Collections
dc.rightsAll rights reserved by the author unless otherwise indicated.en_US
dc.subjectEconomics
dc.subjectBanking
dc.titleEssays on financial stability and the industrial organization of the banking systemen_US
dc.typethesis
dc.typetext
etdms.degree.departmentUniversity of Alabama. Department of Economics, Finance, and Legal Studies
etdms.degree.disciplineEconomics (Business)
etdms.degree.grantorThe University of Alabama
etdms.degree.leveldoctoral
etdms.degree.namePh.D.

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