Maudos, Joaquin and Fernandez de Guevara, Juan (2006): The cost of market power in banking: social welfare loss vs. inefficiency cost. Published in: Documentos de Trabajo, Fundación de las Cajas de Ahorros (2006)
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This paper analyses the relationship between market power in the loan and deposit markets and efficiency in the EU15 countries over 1993-2002. Results show the existence of a positive relationship between market power and cost X-efficiency, allowing rejection of the so-called quiet life hypothesis (Berger and Hannan, 1998). The social welfare loss attributable to market power in 2002 represented 0.54% of the GDP of the EU15. Results show that the welfare gains associated with a reduction of market power are greater than the loss of bank cost efficiency, showing the importance of economic policy measures aimed at removing the barriers to outside competition.
|Item Type:||MPRA Paper|
|Original Title:||The cost of market power in banking: social welfare loss vs. inefficiency cost|
|Keywords:||market power, welfare loss, X-inefficiency, banking|
|Subjects:||D - Microeconomics > D4 - Market Structure, Pricing, and Design > D40 - General
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages
|Depositing User:||Joaquin Maudos|
|Date Deposited:||16. May 2009 09:19|
|Last Modified:||12. Feb 2013 00:13|
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