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Concentration and Competition in the Australian Banking Industry: A Bresnahan–Lau Structure–Conduct–Performance Assessment

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  • Julian Inchauspe
  • Tom Cronje

Abstract

This study assesses the impact on competitiveness of banking takeovers in Australia, to inform regulators and contribute to the mergers and acquisitions body of international evidence. New industrial organisation theories and empirical evidence suggest that more concentration may or may not lead to decreased competition. We assess competitiveness with the Bresnahan–Lau conduct coefficient. We find that the 2008 takeover of St. George had no significant effect, whereas that of BankWest in 2012 attracted a marginally small deadweight efficiency loss. Overall, the sector is found to be fairly competitive, a result that we associate with intense price competition under low switching costs.

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  • Julian Inchauspe & Tom Cronje, 2020. "Concentration and Competition in the Australian Banking Industry: A Bresnahan–Lau Structure–Conduct–Performance Assessment," The Economic Record, The Economic Society of Australia, vol. 96(315), pages 431-449, December.
    • Handle: RePEc:bla:ecorec:v:96:y:2020:i:315:p:431-449
    DOI: 10.1111/1475-4932.12543
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