Carbo, Santiago and Humphrey, David and Maudos, Joaquin and Molyneux, Philip (2006): Cross-Country Comparisons of Competition and Pricing Power in European Banking. Published in: Documento de Trabajo, Fundación BBVA (2006)
Download (194Kb) | Preview
Studies of banking competition and competitive behaviour both within and across countries typically utilise only one of the few measures that are available. In trying to assess the relative competitive position of banking markets in 14 European countries, we find that the existing indicators of competition often give conflicting predictions, both across countries and over time. Seeking greater consistency, we attempt to separate bank pricing power from other, non-core, influences embodied in competition measures. While there is some improvement in cross-country consistency, the main result is that our measure of bank pricing power suggests that banking market competition in Europe may well be stronger than implied by traditional measures and analysis.
|Item Type:||MPRA Paper|
|Original Title:||Cross-Country Comparisons of Competition and Pricing Power in European Banking|
|Subjects:||L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets
D - Microeconomics > D4 - Market Structure and Pricing > D43 - Oligopoly and Other Forms of Market Imperfection
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
|Depositing User:||Joaquin Maudos|
|Date Deposited:||17. May 2009 00:25|
|Last Modified:||13. Feb 2013 05:23|
Angelini, P. and Cetorelli, N. (2003): “The effects of regulatory reform on competition in the banking industry”, Journal of Money, Credit and Banking 35, 663-684.
Barth, J., Caprio, G. and R. Levine (2004): “Bank regulation and supervision: what works best?”, Journal of Financial Intermediation 13, pp. 205-48.
Baumol, W.J. (1982): “Contestable markets: An uprising in the theory of industry structure”, American Economic Review, 72, 1-15.
Baumol, W.J., Panzar, J.C. and Willig, R.D. (1982): Contestable markets and the theory of industry structure. Harcourt Brace Jovanovich, San Diego.
Berg, S.A and M. Kim (1998): “Banks as multiproduct oligopolies: an empirical evaluation of the retail and corporate banking markets”, Journal of Money, Credit and Banking, 30, pp. 135-153.
Berger, A. (1993): "'Distribution free' estimates of efficiency in the US banking industry and tests of the standard distributional assumptions", Journal of Productivity Analysis, 4, pp. 261-292.
Berger, A. (1995): “The profit-structure relationship in banking – tests of market-power and efficient-structure hypotheses”, Journal of Money, Credit, and Banking, 27, 404-415.
Berger, A., Demsetz, R.S. and P.E. Strahan (1999): “The consolidation of the financial services industry: Causes, consequences, and implications for the future”, Journal of Banking & Finance, 23, 2-4, 135-194.
Bikker, J.A. and Bos, J.W.B. (2004): “Trends in Competition and Profitability in the Banking Industry: A basic Framework”, Paper presented for the 25th SUERF Colloquium, Madrid, 14th-16th October.
Bikker, J.A., and Groeneveld, J.M. (2000): “Competition and concentration in the EU banking industry”, Kredit and Kapital, 33, 62-98.
Bikker, J.A. and Haaf, K. (2002): “Competition, concentration and their relationship: An empirical analysis of the banking industry”, Journal of Banking and Finance 26, 2191-214.
Boutillier, M, Gaudin J and S.Grandperrin (2004): “La situation concurrentielle des principaux secteurs bancaires Europeens entre 1993 et 2000: Quels enseignements pour la future structure des marches financiers issue de l’uem”, Fondation Banque de France Working Papers, 22 February.
Bresnahan, T.F. (1982): “The oligopoly solution concept is identified”, Economic Letters, 10, 87- 92.
Bresnahan, T.F. (1989). Empirical studies in industries with market power, Handbook of Industrial Organisation, Vol. II (edited by R. Schmelensee and R. Willig), 1011-1058.
Canhoto, A. (2004): “Portuguese banking: A structural model of competition in the deposits market”, Review of Financial Economics, 13, 41-63.
Carbó, S., Humphrey, D., and Rodríguez, F. (2003): “Deregulation, bank competition and regional growth”, Regional Studies 37:227--237.
Carbó, S., Humphrey, D., and Lopez del Paso, R. (2004): “Electronic Payments and ATMs: Changing Technology and Cost Efficiency in Banking”, SUERF Conference volume, forthcoming 2005.
Carbó, S., Fernández, J., Humphrey, D. and Maudos, J. (2005): “Estimating the intensity of price and non-price in banking: an application to the Spanish case”, WP Fundación BBVA, (forthcoming)
Claessens, S. and Laeven, L. (2004) ‘What drives bank competition? Some international evidence’, Journal of Money, Credit and Banking, 36, 3, Pt.2, June, 563-583.
Coccerese, P. (1998). Competition among dominant firms in concentrated markets: Evidence from the Italian banking industry. Centro Studi in Economia e Finanza, Working Paper 89.
Coccorese, P. (2004). Banking competition and macroeconomic conditions: A disaggregate analysis. Journal of Financial Markets, Institutions and Money, 14, 203-219.
Covosier, S. and Gropp, R. (2002) Bank concentration and retail interest rates, Journal of Banking and Finance 26, 11, 2155-2189
De Bandt, O. and Davis, P. (2000). Competition, contestability and market structure in European banking sectors on the eve of EMU. Journal of Banking and Finance, 24, 1045-1066.
Dermirgüç-Kunt, A., Laeve, A. and Levine, R. (2004): “Regulation, market structure, institutions and the cost of financial intermediation”, Journal of Money, Credit and Banking 36, 592-622.
European Central Bank (ECB). (2003): Structural analysis of the EU banking. ECB, November.
European Central Bank (ECB). (2004): Report on EU banking structure , November
Evanoff, D.D. and D.L. Fortier, (1988): “Re-evaluation of the Structure-Conduct-Performance paradigm in banking" Journal of Financial Services Research 1, 277-94.
Fernández de Guevara, J. and Maudos, J. (2004): “Measuring welfare loss of market power: an application to European banks”, Applied Economics Letters, Vol. 11(13), 833-836.
Fernández de Guevara, J., Maudos, J. and Pérez, F. (2005): “Market power in European banks”, Journal of Financial Services Research 27(2), 109-1338.
Fernández de Guevara, J., Maudos, J. and Pérez, F. (2007): “Integration and competition in the European financial markets”, Journal of International Money and Finance, forthcoming.
Gilbert, R. A (1984): “Bank market structure and competition – A survey”, Journal of Money, Credit and Banking 16, 617-645.
Goddard, J.A., Wilson J.O.S. and P. Molyneux (2001): European Banking: Efficiency, Technology and Growth. John Wiley: London.
Hempell, H.S. (2002): Testing for competition among German banks. Economic Research Centre, Deutsche Bundesbank, Discussion Paper 04/02.
Hondroyiannis, G., Lolos, S. and Papapetrou, E. (1999): “Assessing competitive conditions in the Greek banking system”, Journal of International Financial Markets, Institutions and Money, 9, 377-391.
Humphrey, D., Willesson, M., Bergendahl, G., and Lindblom, T. (2006): “Benefits from a changing payment technology in European banking”, Journal of Banking and Finance, forthcoming.
Iwata, G. (1974): “Measurement of conjectural variations in oligopoly”, Econometrica, 42, 947-966.
Jansen, D. and DeHaan, J. (2003). Increasing concentration in European banking: A macro-level analysis. De Nederlandsche Bank, Research Memorandum WO, No. 743, September.
Kessidis, I. (1991). “Entry and Market Contestability: The Evidence from the United States,” in Entry and Market Contestability: An International Comparison, P. Geroski and J. Schwallbach (Eds). Blackwell, Oxford.
Koutsomanoli-Fillipaki, N and C. Staikouras (2004): “Competition in the new European banking landscape”, Paper presented at the Money, Macro and Finance 36th Annual Conference, Casss Business School, London, September 6th-8th.
Lau, L (1982): “On identifying the degree of competitiveness from industry price and output data”, Economics Letters, 10, 93-99.
Lerner, A. P. (1934): “The Concept of Monopoly and the Measurement of Monopoly Power,” Review of Economic Studies, 1(3), 157-175.
Maudos, J. and Pérez, F. (2003): “Competencia vs. poder de mercado en la banca española”, Moneda y Crédito Vol. 217, pp. 139-166.
Maudos, J. and J. Fernández de Guevara (2004): “Factors explaining the interest margin in the banking sectors of the European Union”, Journal of Banking and Finance, 28/9, 2259-2281.
Molyneux, P., Lloyd-Williams, D.M. and Thornton, J. (1994): “Competitive conditions in European banking”, Journal of Banking and Finance, 18, 445-459.
Neven, D. and Röller, L.H. (1999): “An aggregate structural model of competition in the European banking industry”, International Journal of Industrial Organisation, 17, 1059-1074.
Northcott, C.A. (2004): “Competition in banking: A review of the literature”, Bank of Canada, Working Paper 2004-24.
Padoa-Schioppa, T (2001): “Bank competition: A changing paradigm”, European Finance Review, 5, 13-20.
Panzar, J.C. and J.N. Rosse (1987): “Testing for ‘monopoly’ equilibrium”, The Journal of Industrial Economics, 35 (4), pp. 443-456.
Piloff, S. (2004): “Bank Merger Activity in the United States 1994-2003”, Board of Governors of the Federal Reserve System, Staff Study 176, May (Federal Reserve Board: Washington D.C.).
Shaffer, S (1989): “ Competition in the US banking industry”, Economics Letters 29, 4, 321- 323
Shaffer, S (1993): “A test of competition in Canadian banking”, Journal of Money, Credit and Banking, 25, 1, 49-61
Shaffer, S and J. DiSalvo (1994): “Conduct in a banking duopoly” Journal of Banking and Finance 18, 1063-82.
Smirlock, M. (1985): “Evidence of the (non) relationship between concentration and profitability in banking", Journal of Money Credit and Banking 17 (1985), 69-83.
Stigler, G.J (1964) "A Theory of Oligopoly ." Journal of Political Economy, 72, 55-59.
Suominen, M. (1994): “Measuring competition in banking: A two-product model”, Scandinavian Journal of Economics, 96, pp. 95-110.
Toolsema, L. (2002).”Competition in the Dutch consumer credit market”, Journal of Banking and Finance, 26, 2215-2229.
Uchida, H. and Tsutsui, Y. (2004): “Has competition in the Japanese banking sector improved?”, Journal of Banking and Finance, forthcoming.
Vesala, J. (1995). Testing for competition in banking: Behavioural evidence from Finland. Bank of Finland Studies, E1, Bank of Finland.
Weill, L. (2003) ‘On the relationship between competition and efficiency in the EU banking sectors’ mimeo, LARGE Universite Robert Schumann, Strasbourg, France.