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State-owned Banks as Competition Enhancers, or the Grand Illusion


  • Robert Bichsel

    (Swiss National Bank)

  • Christian Spielmann

    (Plaut Consulting)


We analyze the role of state-ownership in the banking sector from the perspective of competition. Considering both the market for mortgage loans and the market for savings and investment deposits in Switzerland, we test three hypothesis: (i) Is the conduct followed by the state-owned 'cantonal banks' consistent with marginal cost pricing? (ii) Do cantonal banks charge and/or offer relatively customer friendly interest rates? And (iii) is competition intensified by the conduct and presence of cantonal banks. Based on a detailed database containing information at he individual bank level over the 1996-2002 period, the answer is: 'No'.

Suggested Citation

  • Robert Bichsel & Christian Spielmann, 2004. "State-owned Banks as Competition Enhancers, or the Grand Illusion," Industrial Organization 0407003, EconWPA.
  • Handle: RePEc:wpa:wuwpio:0407003
    Note: Type of Document - pdf; pages: 39

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    References listed on IDEAS

    1. Stephen Brown & William Goetzmann & James Park, 1998. "Conditions for Survival: Changing Risk and the Performance of Hedge Fund Managers and CTAs," Yale School of Management Working Papers ysm83, Yale School of Management, revised 01 Apr 2008.
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    Cited by:

    1. Astrid Matthey, 2010. "Do public banks have a competitive advantage?," The European Journal of Finance, Taylor & Francis Journals, vol. 16(1), pages 45-55.

    More about this item


    Competition; Banking; State-ownership; Switzerland; Cantonal banks;

    JEL classification:

    • L - Industrial Organization

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