Can competition in the credit market be excessive?

We study how market power affects investment and welfare when banks choose between restricting loan sizes and monitoring, in order to alleviate an underlying moral hazard problem. The impact of market power on aggregate welfare is the result of two countervailing effects. An increase in banks' market power results in: (i) higher lending rates, which worsens the borrower's incentive problem and reduces investment by unmonitored firms, (ii) higher monitoring effort, which reduces the proportion of credit-constrained firms. Whenever the second effect dominates, it is optimal to provide banks with some degree of market power.

Wine, alcohol, polyphenols and cardiovascular disease

Abstract. Excessive alcohol consumption is associated with increased morbidity and mortality as well as with labour and traffic accidents. However, current evidence suggests beneficial effects of moderate drinking on cardiovascular events including coronary heart disease, ischaemic stroke, peripheral arterial disease and congestive heart failure. The underlying mechanisms to explain these protective effects against coronary heart disease include an increase in high-density lipoprotein cholesterol and an increase in insulin sensitivity, and a decrease in platelet aggregation and circulating concentrations of fibrinogen. However, there are discrepancies regarding the specific effects of different types of beverages on the cardiovascular system, and also whether the possible protective effects of alcoholic beverages are due to their alcohol component (ethanol) or non-alcoholic products containing, mainly polyphenols. Recent randomised clinical trials have shown that wine, a polyphenol-rich alcoholic beverage, provides higher antioxidant and anti-inflammatory effects than some spirits such as gin, a polyphenol-free alcoholic beverage. In addition, dealcoholized red wine decreases blood pressure through a nitric oxide mediated mechanism, suggesting a protective effect of polyphenols on vascular function. Other studies performed in women have observed that daily doses of 1520 g of alcohol as red wine are sufficient to elicit protective effects similar to those observed in men who consumed higher doses of wine. In conclusion, moderate consumption of wine exerts a protective effect on biomarkers related to the progression and development of atherosclerosis due to its alcoholic (ethanol) and non-alcoholic (polyphenols) content. Women are more sensitive to the beneficial effects of wine.