Where You Live Matters: Local Bank Competition, Online Marketplace Lending, and Disparity in Borrower Benefits

2021 ◽  
Author(s):  
Mohammed Alyakoob ◽  
Mohammad S. Rahman ◽  
Zaiyan Wei
Keyword(s):  
Mergers And Acquisitions ◽  
Consumer Credit ◽  
Credit Market ◽  
Bank Loan ◽  
Competitive Market ◽  
Local Market ◽  
Bank Competition ◽  
The Past ◽  
Online Marketplace ◽  
Geographic Boundaries

In the past decade, the proliferation of online marketplace lending has been disrupting the consumer credit market, especially for personal loans for debt consolidation. These lenders, for example, Lending Club, transcend the geographic boundaries within which local banks operate and offer homogeneous access and terms to borrowers. However, the ultimate benefits borrowers derive from marketplace lending can differ significantly because local alternatives may replace marketplace loans when available and favorable. Correspondingly, if local bank competition drives the substitution of an existing marketplace loan with a traditional bank loan, the promise of equal benefits to all borrowers from marketplace lending is unlikely to fully materialize. This competitive dynamic has implications for policy making, particularly in judging the ramifications of bank mergers and acquisitions (M&As). Our results indicate that a borrower who resides in a more competitive market is more likely to pay off a P2P loan early by making a large, one-time payment compared with a borrower from a less competitive market, indicating a substitution with a local bank loan. Thus, borrowers from different markets do not benefit equally from online marketplace lending, disrupting the consumer credit market. In particular, consumers in smaller markets continue to be disadvantaged because of the absence of competitive intensity. This is a consequence of traditional banks competing within their local markets and incentivized to attract marketplace borrowers to traditional loans primarily by their local market conditions. Therefore, unless geographic frictions in traditional lending markets are removed, digital disruptions cannot equalize the benefits to consumers.

scholarly journals COMPETITIVE CONDITIONS IN BANKING INDUSTRY: AN EMPIRICAL ANALYSIS OF THE CONSOLIDATION, COMPETITION AND CONCENTRATION IN THE INDONESIA BANKING INDUSTRY BETWEEN 2001 AND 2009

2012 ◽  
Vol 14 (2) ◽  
pp. 151-186
Author(s):  
Tri Mulyaningsih ◽  
Anne Daly
Keyword(s):  
Mergers And Acquisitions ◽  
Banking Industry ◽  
Market Competition ◽  
Market Concentration ◽  
Jel Classification ◽  
Competitive Market ◽  
Financial Report ◽  
Conventional View ◽  
The Past ◽  
Banking Market

Few large banks dominate the Indonesia banking industri. Furthermore, in the past ten years, there were a series of mergers and acquisitions in the banking market. The facts cause implications on competition. In this paper, we examine these issues exploiting an unconsolidated annual financial report of all commercial banks between 2001 and 2009. The Panzar-Rose method is employed to examine the banks behavior in competition. Estimates indicate that banks in all three subsamples, large; medium-sized and small are working in a monopolistically competitive market. The analysis of market concentration supports the conventional view that concentration impairs competition. The study shows that the most competitive market was the medium-sized banks because it was least concentrated. In contrast, the large market was more concentrated thus it was less competitive. The consolidation policies driven by the Central Bank reduced market concentration because mergers and acquisitions were mostly conducted by the mediumsized and small banks. Further the improvement of market share distribution and the increasing capacity of the merging banks enhanced competition in the Indonesia banking industry. JEL Classification: D43, G21Keywords: Banking, market competition, market structure

scholarly journals COMPETITIVE CONDITIONS IN BANKING INDUSTRY: AN EMPIRICAL ANALYSIS OF THE CONSOLIDATION, COMPETITION AND CONCENTRATION IN THE INDONESIA BANKING INDUSTRY BETWEEN 2001 AND 2009

2012 ◽  
Vol 14 (2) ◽  
pp. 141-175 ◽  
Author(s):  
Tri Mulyaningsih ◽  
Anne Daly
Keyword(s):  
Mergers And Acquisitions ◽  
Commercial Banks ◽  
Banking Industry ◽  
Market Competition ◽  
Market Concentration ◽  
Competitive Market ◽  
Financial Report ◽  
Conventional View ◽  
The Past ◽  
Banking Market

Few large banks dominate the Indonesia banking industri. Furthermore, in the past ten years, there were a series of mergers and acquisitions in the banking market. The facts cause implications on competition. In this paper, we examine these issues exploiting an unconsolidated annual financial report of all commercial banks between 2001 and 2009. The Panzar-Rose method is employed to examine the banks behavior in competition. Estimates indicate that banks in all three subsamples, large; medium-sized and small are working in a monopolistically competitive market. The analysis of market concentration supports the conventional view that concentration impairs competition. The study shows that the most competitive market was the medium-sized banks because it was least concentrated. In contrast, the large market was more concentrated thus it was less competitive. The consolidation policies driven by the Central Bank reduced market concentration because mergers and acquisitions were mostly conducted by the mediumsized and small banks. Further the improvement of market share distribution and the increasing capacity of the merging banks enhanced competition in the Indonesia banking industry.JEL Classification: D43, G21Keywords: Banking, market competition, market structure

Page Limits on Economics Articles: Evidence from Two Journals

2014 ◽  
Vol 28 (3) ◽  
pp. 149-168 ◽  
Author(s):  
David Card ◽  
Stefano DellaVigna
Keyword(s):  
Average Length ◽  
American Economic Review ◽  
Competitive Market ◽  
Monopoly Power ◽  
Median Length ◽  
European Economic ◽  
The Past ◽  
Economic Association ◽  
Economic Journals ◽  
Page Limit

Over the past four decades the median length of the papers published in the “top five” economic journals has grown by nearly 300 percent. We study the effects of a page limit policy introduced by the American Economic Review (AER) in mid-2008 and subsequently adopted by the Journal of the European Economic Association (JEEA) in 2009. We find that the imposition of a 40-page limit on submissions led to no change in the flow of new papers to the AER. Instead, authors responded by shortening and reformatting their papers. For JEEA, in contrast, we conclude that the page-limit policy led authors of longer papers to submit to other journals. These results imply that the AER has substantial monopoly power over submissions, while JEEA faces a very competitive market. Evidence from both journals, and from citations to published papers in the top journals, suggests that longer papers are of higher quality than shorter papers, so the loss of longer submissions at JEEA may have led to a drop in quality. Despite a modest impact of the AER's policy on the average length of submissions, the policy had little or no effect on the length of final accepted manuscripts.

scholarly journals Antagonistic Activity of Pseudomonas Fluorescens Against Fusarium Oxysporum f. sp. Nievum Isolated from Soil Samples in Palestine

2017 ◽  
Vol 6 (2) ◽  
pp. 1 ◽  
Author(s):  
Mazen Salman ◽  
Nabil Shahin ◽  
Nawaf Abu-Khalaf ◽  
Mohammad Jawabrih ◽  
Basima Abu Rumaileh ◽  
...  
Keyword(s):  
Fusarium Oxysporum ◽  
Pseudomonas Fluorescens ◽  
Field Experiments ◽  
Antagonistic Activity ◽  
Arab Countries ◽  
Local Market ◽  
Control Mechanisms ◽  
The Past ◽  
Normal Seedling ◽  
Severe Infections

Watermelon is an important summer crop in Palestine, for several decades filling the needs of local market and some Arab countries. The yield of watermelon decreased dramatically in recent years due to severe infections with the soil borne fungal pathogen Fusarium oxysporum f. sp. niveum (FON). Soil fumigation with methyl bromide was commonly applied by Palestinian farmers until it was recently legally banned. Different control mechanisms were not feasible to overcome problems caused by the disease resulting in decreased watermelon cultivation in Palestine for the past 30 years. In this work, we have experimentally shown that Pseudomonas fluorescens was efficient in controlling FON infection and allowing normal seedling growth of both the root and shoot systems. Field experiments are necessary to further confirm the efficacy of biocontrol application.

The Political Economy of Easy Credit Policies

2016 ◽  
pp. 84
Author(s):  
Karim Azizi ◽  
Thibault Darcillon
Keyword(s):  
Political Economy ◽  
Low Income ◽  
Recent Literature ◽  
Consumer Credit ◽  
Majority Voting ◽  
The Political ◽  
Aggregate Consumption ◽  
The Past ◽  
Marginal Effects

During the past thirty years, U.S. economic growth has disproportionately benefited the richest percentiles of the American population, i.e., the top income earners. Although this phenomenon is difficult to explain from a “standard” political economy perspective (i.e., majority voting), recent literature emphasizes the role of consumer credit as a means of circumventing costly public redistribution. According to this theory, most OECD and, notably, American policymakers should have facilitated middleclass and low-income households’ access to consumer credit to cushion the effects of increased income inequality (i.e., an increased share of GDP held by top earners). Our contribution to this literature is to argue that increases in inequality (as measured by expansions in the share of GDP held by top income earners) should be associated with aggregate consumption increases. Indeed, in response to increased inequality, easy credit policies stimulate low-income and middle-class consumption, which contributes to an increased aggregate consumption level. Using a panel dataset of 20 developed OECD economies between 1980 and 2007, we show that such increases in inequality are actually associated with expansions of aggregate consumption. Finally, when computing marginal effects, we conclude that these expansions increase with the size of the financial sector.

Consumer Credit on the Eve of Affluence

2018 ◽  
pp. 20-47
Author(s):  
Stuart Aveyard ◽  
Paul Corthorn ◽  
Sean O’Connell
Keyword(s):  
Consumer Protection ◽  
Free Market ◽  
Demand Management ◽  
Consumer Credit ◽  
Credit Market ◽  
Balance Of Payments ◽  
Consumer Durables ◽  
Keynesian Theory ◽  
Election Victory

The chapter begins with an examination of debates around consumer protection and hire purchase in the 1930s. It explains the emergence and significance of the Hire Purchase Act, 1938. It explores radical (but thwarted) Labour plans to reshape important sectors of the consumer credit market during the 1940s. The chapter then explains the influence of Keynesian theory and its role in generating new policy on economic demand management. The Conservative election victory of 1951 owed much to the party’s courtship of voters with free market rhetoric, but this government instigated hire purchase controls to improve the balance of payments and combat inflation. Labour dubbed the measures ‘a very vicious piece of class legislation’. This policy created long-standing disagreement between the Treasury and the Board of Trade (and consumer durables manufacturers) about the damage to UK manufacturing. The chapter outlines developments up until the Radcliffe Committee was tasked to examine the issue.

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