Subject. Microeconomic and macroeconomic patterns in shaping the volume and price parameters of credit supply by private banks under constraints related to profitability, risks, and competition. Objectives. The study aims to develop a model describing the process of credit supply formation in the banking sector and to identify equilibrium values of the interest rate and supply volume both at the level of individual private banks and for the banking sector as a whole. Methods. The research draws on microeconomic theory of the firm, industrial organization theory, and models of bank credit rationing. To build the model, the study applies methods for formalizing banks’ behavioral functions as well as tools of analytical modelling. Results. The paper reviews approaches to modelling bank supply in the lending market and provides an overview of classical and contemporary models of credit supply formation, including DSGE models. It identifies key limitations of existing models, such as insufficient attention to banks’ strategic behavior, competition, and institutional constraints. Based on this analysis, the study proposes a model that describes how credit supply is formed by individual banks and by the banking sector as a whole. Conclusions. The proposed model makes it possible to determine equilibrium values of the interest rate and supply volume, taking into account approval parameters, the elasticity of demand share with respect to the rate, and profitability constraints. The study also outlines avenues for further expanding the model by incorporating risks, bank heterogeneity, and refinancing factors. The findings can be used to analyze banks’ behavior in the credit market and to assess the impact of changes in regulatory and macroeconomic policies on the parameters of credit supply.
Keywords: banking sector, credit supply, microeconomic modeling, bank competition
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