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A new way to assess banking competition


  • Tabacco, Giovanni Alberto


This paper proposes a new empirical framework to measure banking competition. The method developed delivers a robust monotonic relationship between the measure and toughness of price competition. Furthermore, the proposed competition measure can be readily applied to other industries.

Suggested Citation

  • Tabacco, Giovanni Alberto, 2013. "A new way to assess banking competition," Economics Letters, Elsevier, vol. 121(2), pages 167-169.
  • Handle: RePEc:eee:ecolet:v:121:y:2013:i:2:p:167-169 DOI: 10.1016/j.econlet.2013.07.028

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    References listed on IDEAS

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    4. Jacob A. Bikker & Sherrill Shaffer & Laura Spierdijk, 2012. "Assessing Competition with the Panzar-Rosse Model: The Role of Scale, Costs, and Equilibrium," The Review of Economics and Statistics, MIT Press, vol. 94(4), pages 1025-1044, November.
    5. Shaffer, Sherrill, 2004. "Patterns of competition in banking," Journal of Economics and Business, Elsevier, vol. 56(4), pages 287-313.
    6. Shaffer, Sherrill & DiSalvo, James, 1994. "Conduct in a banking duopoly," Journal of Banking & Finance, Elsevier, vol. 18(6), pages 1063-1082, December.
    7. Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92.
    8. Xavier Vives, 2011. "Competition and Stability in Banking," Central Banking, Analysis, and Economic Policies Book Series,in: Luis Felipe Céspedes & Roberto Chang & Diego Saravia (ed.), Monetary Policy under Financial Turbulence, edition 1, volume 16, chapter 12, pages 455-502 Central Bank of Chile.
    9. Ellickson, Paul, 2005. "Does Sutton Apply to Supermarkets?," Working Papers 05-05, Duke University, Department of Economics.
    10. Jan Boone, 2008. "A New Way to Measure Competition," Economic Journal, Royal Economic Society, vol. 118(531), pages 1245-1261, August.
    11. Shaffer, Sherrill, 1993. "A Test of Competition in Canadian Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(1), pages 49-61, February.
    12. Marcel Canoy & Machiel van Dijk & Jan Lemmen & Ruud de Mooij & Jürgen Weigand, 2001. "Competition and stability in banking," CPB Document 15, CPB Netherlands Bureau for Economic Policy Analysis.
    13. Kenneth G. Elzinga & David E. Mills, 2011. "The Lerner Index of Monopoly Power: Origins and Uses," American Economic Review, American Economic Association, vol. 101(3), pages 558-564, May.
    14. Federico Etro, 2008. "Stackelberg Competition with Endogenous Entry," Economic Journal, Royal Economic Society, vol. 118(532), pages 1670-1697, October.
    15. Symeonidis, George, 2000. "Price Competition, Non-price Competition and the Market Structure: Theory and Evidence from the UK," Economica, London School of Economics and Political Science, vol. 67(267), pages 437-456, August.
    16. Federico Etro, 2006. "Aggressive leaders," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 146-154, March.
    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. Ausubel, Lawrence M, 1991. "The Failure of Competition in the Credit Card Market," American Economic Review, American Economic Association, vol. 81(1), pages 50-81, March.
    19. Sherrill Shaffer, 2002. "Conduct in a Banking Monopoly," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(3), pages 221-238, May.
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    Cited by:

    1. Tabacco, Giovanni Alberto, 2015. "Does competition spur innovation? Evidence from labor productivity data for the banking industry," Economics Letters, Elsevier, vol. 132(C), pages 45-47.

    More about this item


    Competition measure; Endogenous market structure; Banking industry;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General


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