Money Market under Asymmetries and Imperfect Competitive Loan and Deposit Markets

Information role and optimal market structure have been widely dis-cussed in the current financial crisis. It is suggested that the asymmetries of information could lead to a collapse of the interbank market. We pro-pose a microeconomic model with Cournout competition in the loan and deposit markets that interact with a perfect competitive interbank mar-ket. There exist risky and safe banks that differ in the probability of solvency and there also exist divergences in the supply of deposits be-tween regions. It is proved that the market structure plays a secondary role and with private information, a situation of collapse of the interbank market emerges. ∗I am very grateful to Javier Suárez for his excellent supervision and for generously giving time and help. I am also indebted to CEMFI’s faculties for their suggestions and comments, and especially to Gerard Llobet, for his implication in this Master’s Thesis. Finally, I thank my parents and sister whose unconditional support has been essential throughout these years, without whom I would never have been here. All remaining errors are my own. 1