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| Author: | Sengupta, R. |
| Title: | Foreign entry and bank competition |
| Journal: | Journal of Financial Economics
2007 : MAY, VOL. 84:2, p. 502-528 |
| Index terms: | banking credit markets competition market entry models USA |
| Freeterms: | cross-border liberalization |
| Language: | eng |
| Abstract: | This study models foreign entry and bank competition as the interaction btw. asymmetrically informed principals: The entrant uses collateral as a screening device to contest the incumbent's informational advantage. It is shown that both better information ex-ante and stronger legal protection ex-post facilitate the entry of low-cost outside competitors into credit markets. It is suggested that foreign banks tend to lend more to large firms, thereby neglecting small and medium enterprises (SMEs). |
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