This paper extends Bresnahan's (1982) test of competition to the two-product case. Applying this extension, as well as Bresnahan's original one-product test to the Finnish banking industry before and after the deregulation of financial markets produces some interesting results. With the two...

This paper suggests that the optimal contract in lending under asymmetric information is a fixed rate loan contract. It is shown that deposit banks have an advantage to provide maturity transformation with fixed rate contracts. This is because the spatial nature of deposit market competition...

In this paper we study industry equilibrium and the effects of integration under the assumptions that 1) firms must use outside financing and 2) they face a moral hazard problem due to the possibility of taking excessive risks.These are typical features of banking and insurance, for instance.We...