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Alternative Perspectives on Bank Behavior

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The Industrial Organization of Banking

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Abstract

This chapter surveys different perspectives on what banks produce, contemplates banks' role as portfolio managers, and reviews alternative theories of bank behavior under alternative market structures. Key theories of bank market structure covered include perfect competition, monopoly, oligopoly, and monopolistic competition.

[T]he production process of the financial firm...is a multistage production process involving intermediate outputs, where loanable funds, borrowed from depositors and serviced by the firm with the use of capital, labor, and material inputs, are used in the production of earning assets.—Sealey and Lindley (1977)

[B]anks transform the credit portfolio demanded by borrowers into a deposit portfolio desired by lenders.—Dewatripont and Tirole (1993)

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  1. Waco, Texas, USA

    David VanHoose

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  1. David VanHoose
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VanHoose, D. (2017). Alternative Perspectives on Bank Behavior. In: The Industrial Organization of Banking. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-54326-9_2

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  • DOI: https://doi.org/10.1007/978-3-662-54326-9_2

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  • Print ISBN: 978-3-662-54325-2

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