Testing for competition in the Spanish banking industry: The Panzar-Rosse approach revisited

Luis Gutiérrez de Rozas ()
Additional contact information
Luis Gutiérrez de Rozas: Comisión Nacional de Energía (CNE)

No 726, Working Papers from Banco de España

Abstract: The aim of this paper is to assess the level of competition prevailing in the Spanish banking system. The current analysis employs a widely used non-structural methodology put forward by Panzar and Rosse (1987) —the so-called H-statistic— and draws upon a comprehensive panel dataset of Spanish commercial and savings banks covering the period 1986-2005. Standard estimates characterize a hump-shaped profile for the H-statistic throughout the time span under consideration. Nevertheless, a weighted procedure is subsequently performed in order to control for firm size and the number of branches. The estimation outcome reveals a gradual rising path for the H-statistic, thus suggesting a more competitive environment among larger banks. In both settings, a noteworthy increase in the degree of competition is identified at the turn of the eighties, when several liberalization-oriented policy measures came into force. The aforementioned findings discredit the widespread hypothesis which states that concentration impairs competition.

Keywords: banking; competition; Panzar-Rosse; market structure (search for similar items in EconPapers)
JEL-codes: G21 L10 L13 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2007-08
New Economics Papers: this item is included in nep-ban, nep-com, nep-eec and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (41)

Downloads: (external link)
http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... o/07/Fic/dt0726e.pdf First version, August 2007 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0726

Access Statistics for this paper

More papers in Working Papers from Banco de España Contact information at EDIRC.
Bibliographic data for series maintained by Ángel Rodríguez. Electronic Dissemination of Information Unit. Research Department. Banco de España ().