What drives bank competition? some international evidence
AbstractUsing bank-level data, the authors apply the Panzar and Rosse (1987) methodology to estimate the extent to which changes in input prices are reflected in revenues earned by specific banks in 50 countries'banking systems. They then relate this competitiveness measure to indicators of countries'banking system structures and regulatory regimes. The authors find systems with greater foreign bank entry and fewer entry and activity restrictions to be more competitive. They find no evidence that the competitiveness measure negatively relates to banking system concentration. Their findings confirm that contestability determines effective competition, especially by allowing (foreign) bank entry and reducing activity restrictions on banks.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 3113.
Date of creation: 31 Aug 2003
Date of revision:
Environmental Economics&Policies; Banks&Banking Reform; Payment Systems&Infrastructure; Economic Theory&Research; Labor Policies; Economic Theory&Research; Banks&Banking Reform; Environmental Economics&Policies; Financial Intermediation; Markets and Market Access;
Other versions of this item:
- Claessens, Stijn & Laeven, Luc, 2004. "What Drives Bank Competition? Some International Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 563-83, June.
- Stijn Claessens & Luc Laeven, 2004. "What drives bank competition? Some international evidence," Proceedings, Federal Reserve Bank of Cleveland, pages 563-592.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-16 (All new papers)
- NEP-COM-2004-09-12 (Industrial Competition)
- NEP-FIN-2004-08-16 (Finance)
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