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Assessing banking competition: an application to the Spanish market for (quality-changing) deposits

  • Juan Ayuso


    (Banco de España)

  • Jorge Martínez


    (Banco de España)

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    Taking the Spanish market for deposits as a case study we show the importance of properly controlling for the quality of the services provided when assessing the degree of banking competition. While a simple approach based on estimating the price elasticity of the residual supply of deposit funds faced by banks does not reveal any increase in competition, such an increase is clear when the interest rate on deposits is "corrected" according to the behaviour of variables that proxy the quality of the different services embedded in a bank deposit.

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    Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 0623.

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    Length: 24 pages
    Date of creation: Sep 2006
    Date of revision:
    Handle: RePEc:bde:wpaper:0623
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    9. Carbo Valverde, Santiago & Fernández de Guevara y Rodoselovics, Juan & Humphrey, David & Maudos Villarroya, Joaquín, 2005. "Estimating the intensity of price and non-price competition in banking: an application to the Spanish case," MPRA Paper 15259, University Library of Munich, Germany.
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    18. Pinho, Paulo Soares de, 2000. "The impact of deregulation on price and non-price competition in the Portuguese deposits market," Journal of Banking & Finance, Elsevier, vol. 24(9), pages 1515-1533, September.
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