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Cross-country comparisons of competition and pricing power in European banking

  • Santiago Carbó Valverde
  • David B. Humphrey
  • Joaquin Maudos
  • Philip Molyneux

Studies of banking competition and competitive behaviour both within and across countries typically utilise only one of the few measures that are available. In trying to assess the relative competitive position of banking markets in 14 European countries, we find that the existing indicators of competition often give conflicting predictions, both across countries and over time. Seeking greater consistency, we attempt to separate bank pricing power from other, non-core, influences embodied in competition measures. While there is some improvement in cross-country consistency, the main result is that our measure of bank pricing power suggests that banking market competition in Europe may well be stronger than implied by traditional measures and analysis.

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Paper provided by Federal Reserve Bank of Chicago in its series Proceedings with number 1107.

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Length: 176-189
Date of creation: 2006
Date of revision:
Publication status: Published in Conference on Bank Structure and Competition (2006: 42nd) ; Innovations in real estate markets : risk, rewards, and the role of regulation
Handle: RePEc:fip:fedhpr:1107
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