An empirical research of the behavior of government financial institutions with informational frictions | ||||||||||||
[Abstract] In this paper, we investigate the behavior of government financial institutions(GFI) and private financial intermediaries(banks) empirically. Our basic model is one which was proposed in Inoue(1997). We assume that GFI applies average cost pricing and C(0)>0, C'>0, C">0. The major features of the model as follows.
@Each borrower(firm) has one investment project of unit size and some
ร+v r c@@ r= ร*{v c@' @Providing that the certain gross rate on the funds to banks is ฯ and the bank loan market is oligopolistic, the expected profit of banks is EiฮjqrL{iP|qjร*iLjL|ฯL|CiLj cA ร*iฯ{C'|qvj/iP|ลsj cB@,@ล|iL/ร*jร*'O@cC @@The behavioral equation of GFI is ร*PฯP{CP/L|qv cD @@Comparing Eq.B and D, it is clear that GFI can provide the fund to the firms excluded from the bank loan market because of less ร. Moreover, GFI's loan might be countercyclical. @We adopt the quadratic cost function, and the estimated equations are Banks r iP|ลj|Poฟ|ลv{ฯ{ภL{iP|qjvp@cE GFI@ r ฟ{ภ/QL{ม/L{ฯP{iP|qjv@cF Our estimated results of Eq.E and Eq.F are favorable to the model.
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