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Deregulation, liberalization and consolidation of the Mexican banking system: Effects on competition

  • Maudos, Joaquín
  • Solís, Liliana

This paper analyzes the evolution of competition in the Mexican banking system in the period 1993-2005, a period of deregulation, liberalization and consolidation of the sector. For this purpose we use two indicators of competition from the theory of industrial organization (the Lerner index and the Panzar and Rosse's H-statistic). The empirical evidence does not permit us to reject the existence of monopolistic competition. The Lerner index shows a decrease in competitive rivalry in the deposit market and an increase in the loan market, a cross subsidization strategy being observed. The results obtained call into question the effectiveness of the measures implemented hitherto, aimed at increasing the competition of the Mexican banking system.

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Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 30 (2011)
Issue (Month): 2 (March)
Pages: 337-353

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Handle: RePEc:eee:jimfin:v:30:y:2011:i:2:p:337-353
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30443

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  6. Maudos, Joaquin & Fernandez de Guevara, Juan, 2004. "Factors explaining the interest margin in the banking sectors of the European Union," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2259-2281, September.
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  9. Solís, Liliana & Maudos, Joaquín, 2008. "The social costs of bank market power: Evidence from Mexico," Journal of Comparative Economics, Elsevier, vol. 36(3), pages 467-488, September.
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  17. Haluk Unal & Miguel Navarro, 1999. "POLICY PAPER: The Technical Process of Bank Privatization in Mexico," Journal of Financial Services Research, Springer, vol. 16(1), pages 61-83, September.
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  22. Gruben, William C. & McComb, Robert P., 2003. "Privatization, competition, and supercompetition in the Mexican commercial banking system," Journal of Banking & Finance, Elsevier, vol. 27(2), pages 229-249, February.
  23. Francisco Pérez García & Joaquín Maudos Villarroya & Juan Francisco Fernández de Guevara Radoselovics, 2002. "Market Power In European Banking Sectors," Working Papers. Serie EC 2002-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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  25. Angelini, Paolo & Cetorelli, Nicola, 2003. " The Effects of Regulatory Reform on Competition in the Banking Industry," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(5), pages 663-84, October.
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