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

Assessing competition in the banking industry: A multi-product approach

Contents:

Author Info

  • Barbosa, Klenio de Souza
  • Rocha, Bruno
  • Salazar, Fernando

Abstract

This paper investigates the competitive aspects of multi-product banking operations.Extending Panzar and Rosse (1987)’s model to the case of a multi-product bankingfirm, we show that the higher the economies of scope in multi-product banking are,the lower Panzar-Rosse’s measure of competition in the banking sector is. To test thisempirical implication and determine the impact of multi-production/conglomeration onmarket power, we use a new dataset on Brazilian banking conglomerates. Consistentwith our theoretical prediction, we find that banks offering classic banking products (i.e.,loans and credit cards) and other banking products (i.e., brokerage services, insuranceand capitalization bonds) have substantially higher market power than banks that offeronly classic products. These results suggest a positive bias in the traditional estimatesof competition in which multi-output actions are not considered.

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://bibliotecadigital.fgv.br/dspace/bitstream/10438/11328/5/TD%20339%20-%20CMICRO%2024%20-%20Klenio%20Barbosa%20-%20Bruno%20Rocha-e%20Fernando%20Salazar.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil) in its series Textos para discussão with number 339.

as in new window
Length:
Date of creation: 06 Dec 2013
Date of revision:
Handle: RePEc:fgv:eesptd:339

Contact details of provider:
Postal: Rua Itapeva, 474, 13o andar, CEP 01332-000, São Paulo - SP
Phone: 55 (011) 3799-3350
Fax: 55 (011) 3799-3357
Email:
Web page: http://eesp.fgv.br
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. Berg, Sigbjorn Atle & Kim, Moshe, 1998. "Banks as Multioutput Oligopolies: An Empirical Evaluation of the Retail and Corporate Banking Markets," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 30(2), pages 135-53, May.
  2. Freixas, Xavier & Loranth, Gyongyi & Morrison, Alan D., 2007. "Regulating financial conglomerates," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 16(4), pages 479-514, October.
  3. Ana Carla A. Costa & João M. P. De Mello, 2008. "Judicial Risk and Credit Market Performance: Micro Evidence from Brazilian Payroll Loans," NBER Chapters, National Bureau of Economic Research, Inc, in: Financial Markets Volatility and Performance in Emerging Markets, pages 155-184 National Bureau of Economic Research, Inc.
  4. Coccorese, Paolo, 2009. "Market power in local banking monopolies," Journal of Banking & Finance, Elsevier, Elsevier, vol. 33(7), pages 1196-1210, July.
  5. Claessens, Stijn & Laeven, Luc, 2004. "What Drives Bank Competition? Some International Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 36(3), pages 563-83, June.
  6. Nakane, Marcio I. & Weintraub, Daniela B., 2005. "Bank privatization and productivity: Evidence for Brazil," Journal of Banking & Finance, Elsevier, Elsevier, vol. 29(8-9), pages 2259-2289, August.
  7. Allen, Linda & Rai, Anoop, 1996. "Operational efficiency in banking: An international comparison," Journal of Banking & Finance, Elsevier, Elsevier, vol. 20(4), pages 655-672, May.
  8. Milbourn, Todd T. & Boot, Arnoud W. A. & Thakor, Anjan V., 1999. "Megamergers and expanded scope: Theories of bank size and activity diversity," Journal of Banking & Finance, Elsevier, Elsevier, vol. 23(2-4), pages 195-214, February.
  9. Nakane, Marcio I. & Weintraub, Daniela B., 2005. "Bank privatization and productivity : evidence for Brazil," Policy Research Working Paper Series 3666, The World Bank.
  10. Berger, Allen N, et al, 2004. "Bank Concentration and Competition: An Evolution in the Making," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 36(3), pages 433-51, June.
  11. Baer, Werner & Nazmi, Nader, 2000. "Privatization and restructuring of banks in Brazil," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 40(1), pages 3-24.
  12. Luiz Alberto D’Ávila de Araújo & Paulo de Melo Jorge Neto & David Agustín Salazar Ponce, 2006. "Competição e Concentração entre os Bancos Brasileiros," Economia, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics], ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 7(3), pages 561-586.
  13. Astrid A. Dick, 2002. "Demand estimation and consumer welfare in the banking industry," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2002-58, Board of Governors of the Federal Reserve System (U.S.).
  14. Nicola Cetorelli, 1999. "Competitive analysis in banking: appraisal of the methodologies," Economic Perspectives, Federal Reserve Bank of Chicago, Federal Reserve Bank of Chicago, issue Q I, pages 2-15.
  15. Bresnahan, T.F & Reiss, P.C., 1989. "Entry And Competition In Concentrated Markets," Papers, Stanford - Studies in Industry Economics 151, Stanford - Studies in Industry Economics.
  16. Murray, John D & White, Robert W, 1983. " Economies of Scale and Economies of Scope in Multiproduct Financial Institutions: A Study of British Columbia Credit Unions," Journal of Finance, American Finance Association, American Finance Association, vol. 38(3), pages 887-902, June.
  17. Allen N. Berger & Asli Demirgüç-Kunt & Ross Levine & Joseph G. Haubrich, 2004. "Introduction: Bank concentration and competition: an evolution in the making," Proceedings, Federal Reserve Bank of Cleveland, Federal Reserve Bank of Cleveland, pages 433-451.
  18. Lau, Lawrence J., 1982. "On identifying the degree of competitiveness from industry price and output data," Economics Letters, Elsevier, Elsevier, vol. 10(1-2), pages 93-99.
Full references (including those not matched with items on IDEAS)

Citations

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:fgv:eesptd:339. 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: (Núcleo de Computação da EPGE).

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.