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

Listed author(s):
  • Robert Bichsel

    (Swiss National Bank)

  • Christian Spielmann

    (Plaut Consulting)

Registered author(s):

    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'.

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    Paper provided by EconWPA in its series Industrial Organization with number 0407003.

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    Length: 39 pages
    Date of creation: 09 Jul 2004
    Handle: RePEc:wpa:wuwpio:0407003
    Note: Type of Document - pdf; pages: 39
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