Abstract
We investigate whether non-banks excessively or insufficiently enter the consumer loan market. Not only large non-banks such as Acom, Takefuji and Promise, but many small ones operate in the Japanese consumer loan market. These non-banks borrow most of the necessary funds from a few financial institutions such as banks and insurance companies. The market structure observed between these non-banks and firms that supply funds to them is a market with a vertical structure. Therefore, we developed a model of consumer loan markets as an oligopolistic market with a vertical structure, i.e. one upstream monopolistic bank and multiple non-banks. We show that non-banks insufficiently enter the consumer loan market in the long-run equilibrium. This result contrasts the well known "excess entry" theorem.
JEL Classification Numbers: D43, G29, L13
