The industrial organization of financial markets

Robert Clark, Jean François Houde, Jakub Kastl

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

This chapter discusses recent developments in the literature involving applications of industrial organization methods to finance. We structure our discussion around a simple model of a financial intermediary that concentrates its attention either on (i) the retail market and hence engages in a traditional maturity transformation business by accepting funds that can be used to invest in risky projects (loans), or (ii) the investment business, financing its operations on the “wholesale” market and making markets or investing in higher return riskier projects. Our discussion is centered around the analysis of market structure and competition in each of these markets, focusing in turn on (i) primary and secondary markets for government and corporate debt, (ii) interbank loans, (iii) markets for retail funding, and (iv) credit markets, including mortgages.

Original languageEnglish (US)
Title of host publicationHandbook of Industrial Organization, Volume 5
EditorsKate Ho
PublisherElsevier B.V.
Pages427-520
Number of pages94
Edition1
ISBN (Print)9780323988872
DOIs
StatePublished - Jan 2021

Publication series

NameHandbook of Industrial Organization
Number1
Volume5
ISSN (Print)1573-448X

All Science Journal Classification (ASJC) codes

  • Industrial relations
  • Finance
  • Economics and Econometrics
  • Strategy and Management

Keywords

  • Financial markets
  • Imperfect competition
  • Information frictions
  • Market power
  • Regulation
  • Retail credit
  • Retail funding
  • Wholesale markets

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