
Contents
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25.1 Introduction 25.1 Introduction
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25.2 Measuring Banking Competition and Market Power 25.2 Measuring Banking Competition and Market Power
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25.2.1 Traditional Industrial Organization 25.2.1 Traditional Industrial Organization
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25.2.1.1 Structure-Conduct-Performance 25.2.1.1 Structure-Conduct-Performance
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25.2.1.2 Efficient-structure hypothesis 25.2.1.2 Efficient-structure hypothesis
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25.2.1.3 Studies of Economies of Scale and Scope 25.2.1.3 Studies of Economies of Scale and Scope
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25.2.2 New Empirical Industrial Organization 25.2.2 New Empirical Industrial Organization
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25.2.2.1 25.2.2.1
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25.2.2.2 The Competition Indicator 25.2.2.2 The Competition Indicator
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25.2.2.3 Conjectural-Variations Method 25.2.2.3 Conjectural-Variations Method
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25.2.2.4 Structural Demand Models 25.2.2.4 Structural Demand Models
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25.3 Competition: Conduct And Strategy 25.3 Competition: Conduct And Strategy
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25.3.1 Market Structure and Conduct 25.3.1 Market Structure and Conduct
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25.3.1.1 Loan Markets 25.3.1.1 Loan Markets
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Local Markets: Local Markets:
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Multimarket: Multimarket:
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25.3.1.2 Deposit Markets 25.3.1.2 Deposit Markets
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25.3.1.3 Interplay between Markets 25.3.1.3 Interplay between Markets
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25.4 Banking Regulation And Competition 25.4 Banking Regulation And Competition
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25.4.1 Regulation and Market Structure 25.4.1 Regulation and Market Structure
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25.4.2 Regulation and Bank Conduct 25.4.2 Regulation and Bank Conduct
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25.4.3 Regulation and Bank Strategy 25.4.3 Regulation and Bank Strategy
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25.4.4 Regulation and Financial Stability and Development 25.4.4 Regulation and Financial Stability and Development
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25.5 Information-sharing and Competition 25.5 Information-sharing and Competition
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25.6 Conclusion 25.6 Conclusion
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References References
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25 Competition in Banking
Get accessHans Degryse is Professor of Finance at the Department of Accountancy, Finance and Insurance of the KU Leuven. He is a research fellow at the CEPR, CESIfo, the European Banking Center (EBC), and TILEC. He is a member of the Group of Economic Advisers of ESMA. Before joining Leuven in 2012, he was Professor of Finance at Tilburg University. His research focuses on financial intermediation, including theoretical and empirical banking as well as market microstructure. He has published in many journals including the American Economic Review, Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Management Science, Review of Finance, Journal of Financial Intermediation, and the Economic Journal, and has been presented in leading international conferences such as the American Finance Association, the Western Finance Association, the European Finance Association, and the Financial Intermediation Research Society. He co-authored, with Moshe Kim and Steven Ongena, the graduate textbook Microeconometrics of Banking: Methods, Applications and Results (Oxford University Press, 2009).
Paola Morales-Acevedo is a Researcher at the Central Bank of Colombia, Banco de la República. Prior to that, she was an Economist at the Applied Research and Modelling Division of the Sveriges Riksbank. Her research focuses on empirical banking, financial intermediation, monetary policy, behavioral finance and corporate finance. She holds a Ph.D in Finance from the CentER graduate school of Tilburg University (Netherlands). During her Ph.D studies, she has been a Visiting Scholar at the Department of Banking and Finance of the University of Zurich, as well as an intern at the Research Department of the Sveriges Riksbank and at the Monetary Capital Markets Department (Financial Crisis) of the International Monetary Fund. She has also been a Junior Fellow of the European Banking Center. Paola received a M. Phil. in Finance from Tilburg University in 2011, an M.Sc. in Industrial Engineering in 2009, a B.A. in Economics in 2009 and a B.Sc. in Industrial Engineering in 2007 from Universidad de los Andes (Colombia). After finishing her first bachelor degree, she worked for three years at the Financial Stability Department of the Central Bank of Colombia.
Steven Ongena is a Professor of Banking at the University of Zurich, a senior chair at the Swiss Finance Institute, a research Professor at KU Leuven, and a research fellow in financial economics of CEPR. He is also a research Professor at Deutsche Bundesbank. He has published more than sixty-five papers in refereed journals, including in the American Economic Review, Econometrica, Journal of Finance, Journal of Financial Economics, Journal of International Economics, Journal of Political Economy, Management Science, and Review of Finance. In 2017, he received an ERC Advanced Grant and in 2012 a NYU-Fordham-RPI Rising Star in Finance Award.
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Published:07 April 2015
Cite
Abstract
This chapter combines recent findings from the empirical banking literature with established insights from studies of banking competition and regulation. It starts with a concise overview and assessment of the different methodological approaches taken to address banking competition. While market structure indicators are readily available, they may not be overly informative about the competitive conditions in banking markets. The literature has focused to date on “non-market structure” indicators such as the Panzar-Rosse H-statistic, the Lerner index, and the Boone indicator. The chapter then structures a discussion on the empirical findings based upon a framework that finds its roots in the different theories of financial intermediation. Many other specific approaches to infer banking competition are discussed, in particular, the impact that regulation and information-sharing between banks may have on banking competition.
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