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Competition in the Colombian Banking Sector

Author

Listed:
  • Perez Reyna, David Alejandro

    (Universidad de los Andes)

  • Rodríguez Barraquer, Tomás

    (Universidad de los Andes)

  • Tovar Mora, Jorge Andrés

    (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

  • Perez Reyna, David Alejandro & Rodríguez Barraquer, Tomás & Tovar Mora, Jorge Andrés, 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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    File URL: https://repositorio.uniandes.edu.co/bitstreams/handle/1992/76165/dcede2025-14.pdf
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    References listed on IDEAS

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    3. Gastón Andrés Giordana & Ingmar Schumacher, 2017. "An Empirical Study on the Impact of Basel III Standards on Banks’ Default Risk: The Case of Luxembourg," JRFM, MDPI, vol. 10(2), pages 1-21, April.
    4. King, Michael R., 2013. "The Basel III Net Stable Funding Ratio and bank net interest margins," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4144-4156.
    5. Anureet Virk Sidhu & Shailesh Rastogi & Rajani Gupte & Aashi Rawal & Bhakti Agarwal, 2022. "Net Stable Funding Ratio (NSFR) and Bank Performance: A Study of the Indian Banks," JRFM, MDPI, vol. 15(11), pages 1-13, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Competition; Banking sector; Liquidity regulation;
    All these keywords.

    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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