State-owned Banks as Competition Enhancers, or the Grand Illusion

Robert Bichsel and Christian Spielmann
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Robert Bichsel: Swiss National Bank
Christian Spielmann: Plaut Consulting

Industrial Organization from EconWPA

Abstract: We analyze the role of state-ownership in the banking sector from the perspective of competition. Considering both the market for mortgage loans and the market for savings and investment deposits in Switzerland, we test three hypothesis: (i) Is the conduct followed by the state-owned 'cantonal banks' consistent with marginal cost pricing? (ii) Do cantonal banks charge and/or offer relatively customer friendly interest rates? And (iii) is competition intensified by the conduct and presence of cantonal banks. Based on a detailed database containing information at he individual bank level over the 1996-2002 period, the answer is: 'No'.

Keywords: Competition; Banking; State-ownership; Switzerland; Cantonal banks (search for similar items in EconPapers)
JEL-codes: L (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com
Date: 2004-07-09
Note: Type of Document - pdf; pages: 39

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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpio:0407003

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