Sunk Costs and Competitiveness of European Banks After Deregulation
This paper investigates the determinants of the structure of the banking industry by fitting a monopolistic competition model to a sample of banks drawn from eight EEC countries over 1989-1993. In the theoretical model, banks decide strategically both entry and the branching size of their network. The estimation then measures the branching costs and a upper bound for the entry costs. It also asseses how these costs evolve over time and to what extent they are influenced by various European directives, aiming at deregulating the banking industry.
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|Date of creation:||1997|
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