Testing for imperfect competition on EU deposit and loan markets with Bresnahan's market power model
Bresnahan and Lau developed a model of profit maximising oligopoly banks in order to determine the degree of market power of the average bank. The equilibrium price equation includes a mark up, which is not used at all under perfect competition, partly used under oligopoly or monopolistic competition and fully used under monopoly. The data requirements of the model allow testing of possible use of market power for submarkets. This article investigates the degree of competition on both the deposit and loan markets in nine EU countries, both apart and jointly. The hypothesis of perfect competition can be rejected for the deposit market of the 'entire' EU, for the deposit markets of Germany and Spain and for the lending markets of Germany, Portugal, Spain, Sweden and the UK. Nevertheless, these markets are characterised as highly competitive, because the use or abuse of market power is very limited.
|Date of creation:||Feb 2003|
|Contact details of provider:|| Postal: Postbus 98, 1000 AB Amsterdam|
Web page: http://www.dnb.nl/en/
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.:
- Bikker, Jacob A. & Haaf, Katharina, 2002.
"Competition, concentration and their relationship: An empirical analysis of the banking industry,"
Journal of Banking & Finance,
Elsevier, vol. 26(11), pages 2191-2214, November.
- J.A. Bikker & K. Haaf, 2001. "Competition, Concentration and their Relationship: an EmpiricalAnalysis of the Banking Industry," DNB Staff Reports (discontinued) 68, Netherlands Central Bank.
- J.A. Bikker & K. Haaf, 2000. "Competition, concentration and their relationship: an empirical analysis of the banking industry," Research Series Supervision (discontinued) 30, Netherlands Central Bank, Directorate Supervision.
- Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x.
- Salvanes, K.G. & Steen, F., 1995.
"Testing for Market Power Using a Dynamic OLigopoly Model,"
13/95, Norwegian School of Economics and Business Administration-.
- Steen, Frode & Salvanes, Kjell G., 1999. "Testing for market power using a dynamic oligopoly model," International Journal of Industrial Organization, Elsevier, vol. 17(2), pages 147-177, February.
- Shaffer, Sherrill, 1993.
"A Test of Competition in Canadian Banking,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 25(1), pages 49-61, February.
- J.A. Bikker & J.M. Groeneveld, 1998. "Competition and Concentration in the EU Banking Industry," Research Series Supervision (discontinued) 8, Netherlands Central Bank, Directorate Supervision.
- Toolsema, Linda A., 2002. "Competition in the Dutch consumer credit market," Journal of Banking & Finance, Elsevier, vol. 26(11), pages 2215-2229, November.
- Graddy, K., 1993.
"Testing for Imperfect Competition at the Fulton Fish Market,"
137, Princeton, Department of Economics - Financial Research Center.
- Kathryn Graddy, 1995. "Testing for Imperfect Competition at the Fulton Fish Market," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 75-92, Spring.
- Suominen, Matti, 1994. " Measuring Competition in Banking: A Two-Product Model," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(1), pages 95-110.
- Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92.
- David Genesove & Wallace P. Mullin, 1998. "Testing Static Oligopoly Models: Conduct and Cost in the Sugar Industry, 1890-1914," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 355-377, Summer.
- John C. Hause, 1977. "The Measurement of Concentrated Industrial Structure and the Size Distribution of Firms," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 6, number 1, pages 73-107 National Bureau of Economic Research, Inc.
- Alexander, Donald L., 1988. "The oligopoly solution tested," Economics Letters, Elsevier, vol. 28(4), pages 361-364.
- Ribon, S. & Yosha, O., 1999. "Financial Liberalization and Competition in Banking: an Empirical Investigation," Papers 23-99, Tel Aviv.
- J.A. Bikker & K. Haaf, 2000. "Measures of competition and concentration in the banking industry: a review of the literature," Research Series Supervision (discontinued) 27, Netherlands Central Bank, Directorate Supervision.
- Iwata, Gyoichi, 1974. "Measurement of Conjectural Variations in Oligopoly," Econometrica, Econometric Society, vol. 42(5), pages 947-966, September.
- Shaffer, Sherrill, 1989. "Competition in the U.S. banking industry," Economics Letters, Elsevier, vol. 29(4), pages 321-323.
- Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057 Elsevier.
- Lau, Lawrence J., 1982. "On identifying the degree of competitiveness from industry price and output data," Economics Letters, Elsevier, vol. 10(1-2), pages 93-99.
When requesting a correction, please mention this item's handle: RePEc:dnb:ressup:52. 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: (Rob Vet)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.