Market Power and Market Structure: An Analysis of Costa Rican Banking since 2008

Miguel Cantillo (), José Cascante () and Guillermo Pastrana ()
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Miguel Cantillo: Universidad de Costa Rica
José Cascante: Carlos III University
Guillermo Pastrana: Toulouse School of Economics

No 202202, Working Papers from Universidad de Costa Rica

Abstract: This paper analyzes the evolution of the Lerner index for Costa Rican banks between 2008 and 2019. We document a significant drop in market power during this period, which we relate to less concentration in loans and deposits. The market became less consolidated as a fringe of 29 small banks gained market share at the expense of large and medium banks. We find that for individual banks, a greater market share of loans, and greater loan specialization are related to higher profitability, while a greater market share of deposits and greater size are related to lower profit margins.

Keywords: Banking structure; Latin American banking sector; Market power; Imperfect competition; Lerner index; Umbrella pricing. (search for similar items in EconPapers)
Pages: 24 pages
Date: 2022-03, Revised 2022-03
New Economics Papers: this item is included in nep-ban, nep-com, nep-fdg and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:fcr:wpaper:202202

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