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Jijun Niu
 
''A note on loan market equilibrium when some borrowers are optimistic''
( 2010, Vol. 30 No.2 )
 
 
We study a loan market equilibrium in which some borrowers are optimistic and banks face imperfect competition. We show that the presence of optimistic borrowers reduces the interest rate paid by safe borrowers and increases the interest rate paid by risky borrowers. But it has no net impact on the banks' profits.
 
 
Keywords: Banking, optimistic borrowers, imperfect competition
JEL: G2 - Financial Institutions and Services: General
D4 - Market Structure and Pricing: General
 
Manuscript Received : Dec 07 2009 Manuscript Accepted : May 06 2010

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