On the measurement of market power in the banking industry
AbstractThis paper compares the estimates of the two most widely used non-structural models for market power measurement in banking, namely the conduct parameter method and the revenue test, as applied to a panel of Greek banks over the period 1993-2004. We also propose a dynamic reformulation of these models within a panel data context, in order to address possible statistical problems associated with the dynamic nature of bank-level data. The results suggest that both static methods provide lower estimates of market power relative to their dynamic counterparts. Therefore, the inclusion of some dynamics in the models, even though it increased estimation complexity, helped to reveal some collusive behavior of banks.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 14038.
Date of creation: 12 Jun 2008
Date of revision:
Publication status: Published in Journal of Business Finance and Accounting 7.35(2008): pp. 1023-1047
Market power estimation; Conduct parameter method; Revenue test; Greek banking sector;
Other versions of this item:
- Manthos D. Delis & K. Christos Staikouras & Panagiotis T. Varlagas, 2008. "On the Measurement of Market Power in the Banking Industry," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(7-8), pages 1023-1047.
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-03-22 (All new papers)
- NEP-BAN-2009-03-22 (Banking)
- NEP-COM-2009-03-22 (Industrial Competition)
- NEP-EFF-2009-03-22 (Efficiency & Productivity)
- NEP-IND-2009-03-22 (Industrial Organization)
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