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

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Author Info
Juan Ayuso () (Banco de España)
Jorge Martínez () (Banco de España)
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/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/06/Fic/dt0623e.pdf
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File Function: First version, August 2006
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Publisher Info
Paper provided by Banco de España in its series Banco de España 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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Related research
Keywords: banking competition; panel data; service quality;

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Find related papers by JEL classification:
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
D40 - Microeconomics - - Market Structure and Pricing - - - General

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    Other versions:
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  18. Carbo Valverde, Santiago & Fernández de Guevara y Rodoselovics, Juan & Humphrey, David & Maudos Villarroya, Joaquín, 2005. "Estimating the intensity of price and non-price competition in banking: an application to the Spanish case," MPRA Paper 15259, University Library of Munich, Germany. [Downloadable!]
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  20. Maudos, Joaquin & Fernandez de Guevara, Juan, 2004. "Factors explaining the interest margin in the banking sectors of the European Union," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2259-2281, September. [Downloadable!] (restricted)
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