The Multimarket Contacts Theory: An Application to Italian Banks

R. De Bonis and A. Ferrando

Working Papers from Banca Italia - Servizio di Studi

Abstract: The multimarket contact hypothesis holds that more contacts between firms competing in the same markets may induce more collusion. This paper tests the hypothesis for the Italian banking market, analysing the behaviour of the largest Italian banks from 1990 to 1996. Market rivalry is gauged by changes in loan market shares and interest rates in each Italian province. Different measures of multimarket contacts are built. We estimate the effects of increasing multimarket contacts, concentration indicators, banks' costs and loan growth on variations in market shares and interest rates.

Keywords: BANKS; ANTITRUST LEGISLATION; COMPETITION (search for similar items in EconPapers)
JEL-codes: G21 C33 L40 (search for similar items in EconPapers)
Date: 2000
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