IDEAS home Printed from https://ideas.repec.org/a/pal/compes/v50y2008i2p253-273.html
   My bibliography  Save this article

Banking Competition and Efficiency: A Micro-Data Analysis on the Czech Banking Industry

Author

Listed:
  • Anca Pruteanu-Podpiera

    () (Czech National Bank, Prague, Czech Republic.)

  • Laurent Weill

    () (Institut d'Etudes Politiques, Université Robert Schuman, 47 avenue de la Foret Noire, Strasbourg 67000, France.)

  • Franziska Schobert

    () (Deutsche Bundesbank, Frankfurt, Germany.)

Abstract

Banking competition is expected to provide welfare gains by reducing monopoly rents and cost inefficiencies, favouring a reduction of loan rates and then an increase in investment. These expected gains are a major issue for transition countries in which bank credit represents the largest source of external finance for companies. With the use of quarterly data for Czech banks, this paper aims to estimate the effects of banking competition in the Czech Republic. First, we measure the level and evolution of banking competition between 1994 and 2005. Competition is measured by the Lerner index on the loan market, using data on loan prices. We find no improvement in banking competition during the transition period. Second, we investigate the relationship and causality between competition and efficiency. We perform a Granger-causality-type analysis that supports negative causality only running from competition to efficiency. Therefore, our results reject the intuitive ‘quiet life’ hypothesis and indicate a negative relationship between competition and efficiency in banking. Comparative Economic Studies (2008) 50, 253–273. doi:10.1057/palgrave.ces.8100248

Suggested Citation

  • Anca Pruteanu-Podpiera & Laurent Weill & Franziska Schobert, 2008. "Banking Competition and Efficiency: A Micro-Data Analysis on the Czech Banking Industry," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 50(2), pages 253-273, June.
  • Handle: RePEc:pal:compes:v:50:y:2008:i:2:p:253-273
    as

    Download full text from publisher

    File URL: http://www.palgrave-journals.com/ces/journal/v50/n2/pdf/8100248a.pdf
    File Function: Link to full text PDF
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: http://www.palgrave-journals.com/ces/journal/v50/n2/full/8100248a.html
    File Function: Link to full text HTML
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:compes:v:50:y:2008:i:2:p:253-273. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Springer Nature Abstracting and Indexing). General contact details of provider: http://www.palgrave-journals.com/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.