Measuring Competition and Stability: Recent Evidence for European Banking
This paper uses a variety of structural and non-structural measures (including the Lerner index, Rosse-Panzar H-statistic and Profits-Persistence parameters) to gauge competitive conditions in 11 European banking systems over 1997 to 2008. As in Carbo et al (2009) we find that competition measures tend to provide inconsistent results and the measures are statistically unrelated. We also find that our banking sector risk measures (Z-score, loan-loss provisions, variation in ROE and ROA) are unrelated to the various competition measures. This raises doubts about the generality of the findings of previous empirical studies that investigate competition-stability and competition fragility issues.
|Date of creation:||Oct 2010|
|Date of revision:|
|Contact details of provider:|| Postal: Gwynedd LL57 2DG|
Phone: +44 (0) 1248 383648
Web page: http://www.bangor.ac.uk/business/research/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Berger, Allen N, 1995. "The Profit-Structure Relationship in Banking--Tests of Market-Power and Efficient-Structure Hypotheses," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(2), pages 404-31, May.
- Alexander Schiersch & Jens Schmidt-Ehmcke, 2010. "Empiricism Meets Theory: Is the Boone-Indicator Applicable?," Discussion Papers of DIW Berlin 1030, DIW Berlin, German Institute for Economic Research.
- Neven, Damien & Roller, Lars-Hendrik, 1999. "An aggregate structural model of competition in the European banking industry," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 1059-1074, October.
- Goddard, J. A. & Wilson, J. O. S., 1999. "The persistence of profit: a new empirical interpretation," International Journal of Industrial Organization, Elsevier, vol. 17(5), pages 663-687, July.
- Zuzana Fungácová & Laura Solanko & Laurent Weill, 2010.
"Market power in the russian banking industry,"
CEPII research center, issue 124, pages 127-146.
- Zuzana Fungacova & Laura Solanko & Laurent Weill, 2010. "Market Power in the Russian Banking Industry," Working Papers of LaRGE Research Center 2010-09, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
- Fungáčová, Zuzana & Solanko, Laura & Weill, Laurent, 2010. "Market power in the Russian banking industry," BOFIT Discussion Papers 3/2010, Bank of Finland, Institute for Economies in Transition.
- Geroski, Paul A & Jacquemin, Alexis, 1988. "The Persistence of Profits: A European Comparison," Economic Journal, Royal Economic Society, vol. 98(391), pages 375-89, June.
- Goddard, John & Molyneux, Philip & Wilson, John O.S. & Tavakoli, Manouche, 2007. "European banking: An overview," Journal of Banking & Finance, Elsevier, vol. 31(7), pages 1911-1935, July.
- John H. Boyd & Gianni De Nicolã, 2005. "The Theory of Bank Risk Taking and Competition Revisited," Journal of Finance, American Finance Association, vol. 60(3), pages 1329-1343, 06.
- Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
- Iannotta, Giuliano & Nocera, Giacomo & Sironi, Andrea, 2007. "Ownership structure, risk and performance in the European banking industry," Journal of Banking & Finance, Elsevier, vol. 31(7), pages 2127-2149, July.
- Maudos, Joaquin & Fernandez de Guevara, Juan, 2003.
"Factors Explaining the Interest Margin in the Banking Sectors of the European Union,"
15252, University Library of Munich, Germany.
- 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.
- Al-Muharrami, Saeed & Matthews, Kent & Khabari, Yusuf, 2006.
"Market Structure and Competitive Conditions in the Arab GCC Banking System,"
Cardiff Economics Working Papers
E2006/8, Cardiff University, Cardiff Business School, Economics Section.
- Al-Muharrami, Saeed & Matthews, Kent & Khabari, Yusuf, 2006. "Market structure and competitive conditions in the Arab GCC banking system," Journal of Banking & Finance, Elsevier, vol. 30(12), pages 3487-3501, December.
- Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92.
- Stiroh, Kevin J & Strahan, Philip E, 2003. " Competitive Dynamics of Deregulation: Evidence from U.S. Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(5), pages 801-28, October.
- Mueller,Dennis C., 2009.
"Profits in the Long Run,"
Cambridge University Press, number 9780521101592, Junio.
- Hondroyiannis, George & Lolos, Sarantis & Papapetrou, Evangelia, 1999. "Assessing competitive conditions in the Greek banking system," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 9(4), pages 377-391, November.
- Canhoto, Ana, 2004. "Portuguese banking: A structural model of competition in the deposits market," Review of Financial Economics, Elsevier, vol. 13(1-2), pages 41-63.
- Arellano, Manuel & Bover, Olympia, 1995.
"Another look at the instrumental variable estimation of error-components models,"
Journal of Econometrics,
Elsevier, vol. 68(1), pages 29-51, July.
- M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
- Johan Mathisen & Thierry D. Buchs, 2005. "Competition and Efficiency in Banking; Behavioral Evidence from Ghana," IMF Working Papers 05/17, International Monetary Fund.
- Hempell, Hannah S., 2002. "Testing for Competition Among German Banks," Discussion Paper Series 1: Economic Studies 2002,04, Deutsche Bundesbank, Research Centre.
- Giuliano Iannotta & Giacomo Nocera & Andrea Sironi, 2007. "Ownership structure, risk and performance in the European banking industry," Post-Print hal-00861806, HAL.
- Coccorese, Paolo, 2004. "Banking competition and macroeconomic conditions: a disaggregate analysis," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 14(3), pages 203-219, July.
- Carol Ann Northcott, 2004. "Competition in Banking: A Review of the Literature," Staff Working Papers 04-24, Bank of Canada.
- Molyneux, Philip & Thornton, John, 1992. "Determinants of European bank profitability: A note," Journal of Banking & Finance, Elsevier, vol. 16(6), pages 1173-1178, December.
- Suominen, Matti, 1994. " Measuring Competition in Banking: A Two-Product Model," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(1), pages 95-110.
- Iwata, Gyoichi, 1974. "Measurement of Conjectural Variations in Oligopoly," Econometrica, Econometric Society, vol. 42(5), pages 947-66, September.
- Turk Ariss, Rima, 2010. "On the implications of market power in banking: Evidence from developing countries," Journal of Banking & Finance, Elsevier, vol. 34(4), pages 765-775, April.
When requesting a correction, please mention this item's handle: RePEc:bng:wpaper:10020. 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: (Huw Hughes)
If references are entirely missing, you can add them using this form.