Quantification of the Effect of Regulation on Firms’ Demand for Credits and Banks’ Market Power

There are at least two important aspects of our research question that require an extension of project 1 towards a structural model: a) provide welfare claims, and b) estimates of forward looking analysis. We are interested to model firms’ demand for credit and based on the estimated coefficients we are interested to run counterfactuals that consider the banks’ regulatory environment. The aim is to assess the change in regulation and its effects on market structure in the banking sector and on firms’ credit demand.