On the measurement of market power in the banking industry

Manthos D. Delis (), Christos Staikouras and Panagiotis Varlagas

MPRA Paper from University Library of Munich, Germany

Abstract: This paper compares the estimates of the two most widely used non-structural models for market power measurement in banking, namely the conduct parameter method and the revenue test, as applied to a panel of Greek banks over the period 1993-2004. We also propose a dynamic reformulation of these models within a panel data context, in order to address possible statistical problems associated with the dynamic nature of bank-level data. The results suggest that both static methods provide lower estimates of market power relative to their dynamic counterparts. Therefore, the inclusion of some dynamics in the models, even though it increased estimation complexity, helped to reveal some collusive behavior of banks.

Keywords: Market power estimation; Conduct parameter method; Revenue test; Greek banking sector (search for similar items in EconPapers)
JEL-codes: L10 P20 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-com, nep-eff and nep-ind
Date: 2008-06-12
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Published in Journal of Business Finance and Accounting 7.35(2008): pp. 1023-1047

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http://mpra.ub.uni-muenchen.de/14038/

Related works:
Journal Article: On the Measurement of Market Power in the Banking Industry (2008-09)
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:14038

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