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RESEARCH PRODUCT
Industrial loans and market structure
Miguel González-maestreLluís M. Granerosubject
OligopolyEconomics and EconometricsMarket structureEntry costbusiness.industrySecondary sector of the economyEconomicsRetail bankingFinancial systembusinessFinanceBanking sectordescription
Abstract Based on the observation that financing is one of the main obstacles to create new firms, this paper deals with the interactions between the market structure of both the banking sector and the borrowing industries. We consider that firms’ installation costs are financed by means of industrial loans from specialized banks. With endogenous entry in banking activity as well as in the borrowing industry, we find that a natural oligopoly emerges in both sectors if the entry cost in the industrial sector is small enough, relative to the banks’ entry cost.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2003-10-01 | European Economic Review |