Advanced Search
MyIDEAS: Login to save this paper or follow this series

Testing for imperfect competition on EU deposit and loan markets with Bresnahan's market power model

Contents:

Author Info

  • J.A. Bikker

Abstract

Bresnahan and Lau developed a model of profit maximising oligopoly banks in order to determine the degree of market power of the average bank. The equilibrium price equation includes a mark up, which is not used at all under perfect competition, partly used under oligopoly or monopolistic competition and fully used under monopoly. The data requirements of the model allow testing of possible use of market power for submarkets. This article investigates the degree of competition on both the deposit and loan markets in nine EU countries, both apart and jointly. The hypothesis of perfect competition can be rejected for the deposit market of the ‘entire’ EU, for the deposit markets of Germany and Spain and for the lending markets of Germany, Portugal, Spain, Sweden and the UK. Nevertheless, these markets are characterised as highly competitive, because the use or abuse of market power is very limited.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.dnb.nl/en/binaries/ot052_tcm47-146062.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Netherlands Central Bank, Directorate Supervision in its series Research Series Supervision (discontinued) with number 52.

as in new window
Length:
Date of creation: Feb 2003
Date of revision:
Handle: RePEc:dnb:ressup:52

Contact details of provider:
Postal: Postbus 98, 1000 AB Amsterdam
Web page: http://www.dnb.nl/en/
More information through EDIRC

Related research

Keywords:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Suominen, Matti, 1994. " Measuring Competition in Banking: A Two-Product Model," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(1), pages 95-110.
  2. John C. Hause, 1977. "The Measurement of Concentrated Industrial Structure and the Size Distribution of Firms," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 6, number 1, pages 73-107 National Bureau of Economic Research, Inc.
  3. J.A. Bikker & K. Haaf, 2001. "Competition, Concentration and their Relationship: an EmpiricalAnalysis of the Banking Industry," DNB Staff Reports (discontinued) 68, Netherlands Central Bank.
  4. Graddy, K., 1993. "Testing for Imperfect Competition at the Fulton Fish Market," Papers 137, Princeton, Department of Economics - Financial Research Center.
  5. Sherrill Shaffer, 1990. "A test of competition in Canadian banking," Working Papers 90-18, Federal Reserve Bank of Philadelphia.
  6. Shaffer, Sherrill, 1989. "Competition in the U.S. banking industry," Economics Letters, Elsevier, vol. 29(4), pages 321-323.
  7. J.A. Bikker & K. Haaf, 2000. "Measures of competition and concentration in the banking industry: a review of the literature," Research Series Supervision (discontinued) 27, Netherlands Central Bank, Directorate Supervision.
  8. Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92.
  9. J.A. Bikker & J.M. Groeneveld, 1998. "Competition and Concentration in the EU Banking Industry," Research Series Supervision (discontinued) 8, Netherlands Central Bank, Directorate Supervision.
  10. Ribon, S. & Yosha, O., 1999. "Financial Liberalization and Competition in Banking: an Empirical Investigation," Papers 23-99, Tel Aviv.
  11. Toolsema, Linda A., 2002. "Competition in the Dutch consumer credit market," Journal of Banking & Finance, Elsevier, vol. 26(11), pages 2215-2229, November.
  12. Salvanes, K.G. & Steen, F., 1995. "Testing for Market Power Using a Dynamic OLigopoly Model," Papers 13/95, Norwegian School of Economics and Business Administration-.
  13. David Genesove & Wallace P. Mullin, 1998. "Testing Static Oligopoly Models: Conduct and Cost in the Sugar Industry, 1890-1914," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 355-377, Summer.
  14. Iwata, Gyoichi, 1974. "Measurement of Conjectural Variations in Oligopoly," Econometrica, Econometric Society, vol. 42(5), pages 947-66, September.
  15. Alexander, Donald L., 1988. "The oligopoly solution tested," Economics Letters, Elsevier, vol. 28(4), pages 361-364.
  16. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057 Elsevier.
  17. Lau, Lawrence J., 1982. "On identifying the degree of competitiveness from industry price and output data," Economics Letters, Elsevier, vol. 10(1-2), pages 93-99.
  18. Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, December.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Jacob Bikker & Jaap Bos, 2004. "Trends in Competition and Profitability in the Banking Industry: A Basic Framework," DNB Working Papers 018, Netherlands Central Bank, Research Department.
  2. Leuvensteijn, Michiel van & Bikker, Jacob A. & Rixtel, Adrian A.R.J.M. van & Kok-Sørensen, Christoffer, 2007. "A new approach to measuring competition in the loan markets of the euro area," CEI Working Paper Series 2007-6, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  3. Leo de Haan & Elmer Sterken, 2006. "Price Leadership in the Dutch Mortgage Market," DNB Working Papers 102, Netherlands Central Bank, Research Department.
  4. Héctor Gustavo González Padilla, 2009. "An Assessment of the Competition in the Banking Industry: Empirical Evidence from Argentina with Data at Bank Level," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(55), pages 93-112, July - Se.
  5. Enrique Benito, 2008. "Size, growth and bank dynamics," Banco de Espa�a Working Papers 0801, Banco de Espa�a.
  6. Héctor G. González Padilla, 2009. "La privatización de bancos públicos provinciales en Argentina en 1993-2001," CEMA Working Papers: Serie Documentos de Trabajo. 401, Universidad del CEMA.
  7. Horst Gischer & Mike Stiele, 2004. "Testing for Banking Competition in Germany: Evidence from Savings Banks," Money Macro and Finance (MMF) Research Group Conference 2004 35, Money Macro and Finance Research Group.
  8. Michiel van Leuvensteijn & Christoffer Kok Sørensen & Jacob A. Bikker & Adrian van Rixtel, 2008. "Impact of bank competition on the interest rate pass-through in the euro area," Banco de Espa�a Working Papers 0828, Banco de Espa�a.
  9. Gustavo Hector González Padilla, 2010. "An Assessment of Competition in the Argentine Banking Sector: Empirical Evidence with Data at Bank Level," BCRA Working Paper Series 201049, Central Bank of Argentina, Economic Research Department.
  10. Samantas, Ioannis, 2013. "Income-specific estimates of competition in European banking," MPRA Paper 51098, University Library of Munich, Germany.
  11. Elmer Sterken, 2006. "Competition in the Dutch Mortgage Market," De Economist, Springer, vol. 154(4), pages 587-600, December.
  12. Shrimal Perera & Michael Skully & J. Wickramanayake, 2006. "Competition and structure of South Asian banking: a revenue behaviour approach," Applied Financial Economics, Taylor & Francis Journals, vol. 16(11), pages 789-801.
  13. Chang, Shun-Chiao & Chang, Jui-Chuan Della & Huang, Tai-Hsin, 2012. "Assessing market power in the U.S. commercial banking industry under deregulation," Economic Modelling, Elsevier, vol. 29(5), pages 1558-1565.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:dnb:ressup:52. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rob Vet).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.