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Assessing banking competition: an application to the Spanish market for (quality-changing) deposits

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  • Juan Ayuso

    ()
    (Banco de España)

  • Jorge Martínez

    ()
    (Banco de España)

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    Abstract

    Taking the Spanish market for deposits as a case study we show the importance of properly controlling for the quality of the services provided when assessing the degree of banking competition. While a simple approach based on estimating the price elasticity of the residual supply of deposit funds faced by banks does not reveal any increase in competition, such an increase is clear when the interest rate on deposits is "corrected" according to the behaviour of variables that proxy the quality of the different services embedded in a bank deposit.

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    File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/06/Fic/dt0623e.pdf
    File Function: First version, August 2006
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    Bibliographic Info

    Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 0623.

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    Length: 24 pages
    Date of creation: Sep 2006
    Date of revision:
    Handle: RePEc:bde:wpaper:0623

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    Keywords: banking competition; panel data; service quality;

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    Cited by:
    1. Enrique Benito, 2008. "Size, growth and bank dynamics," Banco de Espa�a Working Papers 0801, Banco de Espa�a.

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