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The evolution of competition in the UK deposit-taking sector, 1989–2013

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  • Sebastian de-Ramon
  • Michael Straughan

Abstract

Improving competition was one of the key objectives of the UK banking and building society deregulation that came into effect in the 1980s. We use data for banks and building societies for the period 1989–2013 and a number of measures of competition, to examine whether competition did improve over the longer term, and whether the financial crisis changed this trend. We find that following a period of heightened competition in the 1990s between banks and building societies in UK retail markets, consolidation in the sector in the late 1990s saw the emergence of large banking groups and a reduction in competition in the 2000s, ahead of the financial crisis. We also find no evidence that competition subsequently improved following the crisis. Lastly, we find that market power, as measured by the Lerner index, is likely to be considerably less for building societies than for other firms.

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  • Sebastian de-Ramon & Michael Straughan, 2020. "The evolution of competition in the UK deposit-taking sector, 1989–2013," The European Journal of Finance, Taylor & Francis Journals, vol. 26(10), pages 958-977, July.
    • Handle: RePEc:taf:eurjfi:v:26:y:2020:i:10:p:958-977
    DOI: 10.1080/1351847X.2019.1574270
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    Cited by:

    1. Carmelo Algeri & Antonio F. Forgione & Carlo Migliardo, 2022. "Do spatial dependence and market power matter in the diversification of cooperative banks?," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 51(3), November.

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