西南财大光华讲坛——社会名流与企业家论坛第2180期
Title: Bank Competition, Securitization and Risky Investment
Speaker: LI Zhe (Shanghai University of Finance and Economics)
Location: 经管楼305室, Room 305, RIEM Building Guanghua
Time: 15:00-16:30,Oct 24, Monday
Host: PENG Tao，彭涛 经济与管理研究院 副教授
abstract: We build a dynamic general equilibrium model of bank competition in which securitization is banks' optimal choice. A symmetric capacity-constrained Bertrand competition equilibrium exists as in the directed search literature, e.g. Burdett, Shi and Wright (2001). A key feature of the model is that banks face heterogeneous projects and they can use their lending rate as a tool to compete for good projects. The competition of banks lowers the lending rate, which in turn results in a low deposit rate. Consequently, a low level of credit supply and some uninvested high-return projects coexist. The shortage of credit supply resulted from bank competition naturally motivates banks to sell their assets through securities in order to raise more fund to invest in the projects being rationed.