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Deng, G.-J., Zeng, Y., Li, Q., & He, J. (2012). Strategic cooperation decision of the foreign bank and China’s bank. Journal of Management Sciences in China, 15, 71-85.

has been cited by the following article:

• TITLE: Foreign Entry and Multi-Period Bank Competition Based on Collateral View

  AUTHORS: Xudong Chen

  KEYWORDS: Multi-Period Bank Competition; Collateral; Screening

  JOURNAL NAME: Journal of Financial Risk Management, Vol.2 No.1, March 28, 2013

  ABSTRACT: This paper constructs the multi-period model of spatial bank competition between the local bank and the foreign bank with financing cost (efficiency) advantage, the results show that: 1) when the amount of the high risk borrowers in the marker reaches a threshold, both banks will use collateral as screening device to distinguish different risk borrowers, only low risk borrowers will borrow money from the bank; 2) the space distance (production differentiation) can help local bank confront the foreign bank’s cost (efficiency) advantage. Further comparative static analysis shows: the bank’s profit decreases with its financing cost, and the bank will require higher loan rate and less collateral with its financing cost increasing; Decreasing transaction cost and better legal environment will facilitate the bank to require more collateral and lower loan rate.