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Entry in Independent Submarkets - An Application to the Spanish Retail Banking Market

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  • Rebeca de Juan

    (UNED, PIE-FEP)

Abstract

This paper is aimed at the analysis of the banks’ decisions to open branches in submarkets and, in particular, to test if these decisions can be considered mainly determined by what is happening in each submarket, irrespective of what has happened in other submarkets, as Sutton’s independent submarkets model suggests. With data on the Spanish retail banking sector for the period 1994-98, I specify and estimate a discrete choice model to examine the entry probability of potential new entrants into submarkets. I find that the entry decisions of potential entrants are mainly determined by submarket characteristics, as opposed to entity-specific characteristics. This result is consistent with the assumptions of the theoretical model.

Suggested Citation

  • Rebeca de Juan, 2002. "Entry in Independent Submarkets - An Application to the Spanish Retail Banking Market," The Economic and Social Review, Economic and Social Studies, vol. 33(1), pages 109-118.
    • Handle: RePEc:eso:journl:v:33:y:2002:i:1:p:109-118
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    File URL: http://www.esr.ie/Vol33_1RdeJuan.pdf
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    References listed on IDEAS

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    1. repec:adr:anecst:y:1994:i:34:p:07 is not listed on IDEAS
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    Cited by:

    1. Roberto Felici & Marcello Pagnini, 2008. "Distance, Bank Heterogeneity And Entry In Local Banking Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 56(3), pages 500-534, September.

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