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A Quantitative Model of Banking Industry Dynamics

Dean Corbae & Pablo D’Erasmo

Journal of Political Economy: Macroeconomics2025https://doi.org/10.1086/738381preprint
ABDC A
Weight
0.69

Abstract

business cycles, and borrower default frequencies. The model is parameterized to match a set of key aggregate and cross-sectional statistics for the U.S. banking industry. As in the data, the model generates countercyclical interest rates on loans, bank failure rates, borrower default frequencies, and charge-off rates as well as a procyclical loan supply and entry rates. The model can be used to study bank competition and the benefits/costs of policies to subsidize/mitigate bank entry/exit.

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https://doi.org/https://doi.org/10.1086/738381

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@article{dean2025,
  title        = {{A Quantitative Model of Banking Industry Dynamics}},
  author       = {Dean Corbae & Pablo D’Erasmo},
  journal      = {Journal of Political Economy: Macroeconomics},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1086/738381},
}

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A Quantitative Model of Banking Industry Dynamics

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Evidence weight

0.69

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.93 × 0.4 = 0.37
M · momentum0.60 × 0.15 = 0.09
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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