Mixed ownership, managerial incentives and bank competition

B. Saha, R. Sensarma

    Research output: Contribution to journalArticlepeer-review

    7 Citations (Scopus)
    131 Downloads (Pure)

    Abstract

    We consider deposit competition between two banks, where prior to competition one bank is subjected to a nationalization decision and the other bank chooses managerial incentives. The government who maximizes a modified form of social welfare (with greater weight on profit than depositor surplus) chooses only partial nationalization, which still hurts the rival private bank. But by offering deposit-linked managerial incentives the private bank recovers its lost profit and induces even less nationalization, leaving social welfare unchanged. However, under interest rate competition for differentiated deposits the private bank offers profit-linked managerial incentives while the other bank may be completely nationalized.
    Original languageEnglish
    Pages (from-to)385-403
    Number of pages19
    JournalBulletin of Economic Research
    Volume63
    Issue number4
    DOIs
    Publication statusPublished - 1 Oct 2011

    Keywords

    • banking
    • managerial incentive
    • mixed duopoly
    • nationalization
    • privatization
    • G21
    • L13
    • L33

    Fingerprint

    Dive into the research topics of 'Mixed ownership, managerial incentives and bank competition'. Together they form a unique fingerprint.

    Cite this