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Competition in the Colombian Banking Sector

Author

Listed:
  • David Alejandro Perez Reyna

    (Universidad de los Andes)

  • Tom√°s Rodr√≠guez Barraquer

    (Universidad de los Andes)

  • Jorge Andr√©s Tovar Mora

    (Universidad de los Andes)

Abstract

In this paper, we analyze the competition in the Colombian banking sector using banklevel monthly balance sheet information. We estimate the changes in measures of market power due to the exogenous introduction of a liquidity regulation. Our results suggest that introducing a net stable funding ratio increased the Lerner index in the short term, thus signaling a higher exercise of market power. We rationalize these changes in a simple theoretical model that allows us to analyze the tightening of liquidity requirements for banks and find that a higher Lerner index implies more market power in the loan market than in the deposit market.

Suggested Citation

  • David Alejandro Perez Reyna & Tom√°s Rodr√≠guez Barraquer & Jorge Andr√©s Tovar Mora, 2025. "Competition in the Colombian Banking Sector," Documentos CEDE 21371, Universidad de los Andes, Facultad de Economía, CEDE.
    • Handle: RePEc:col:000089:021371
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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