Competition in the Colombian Banking Sector

David Alejandro Perez Reyna (), Tomás Rodríguez Barraquer () and Jorge Tovar
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David Alejandro Perez Reyna: Universidad de los Andes
Tomás Rodríguez Barraquer: Universidad de los Andes
Authors registered in the RePEc Author Service: David Perez-Reyna

No 21371, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: In this paper, we analyze the competition in the Colombian banking sector using banklevel monthly balance sheet information. We estimate the changes in measures of market power due to the exogenous introduction of a liquidity regulation. Our results suggest that introducing a net stable funding ratio increased the Lerner index in the short term, thus signaling a higher exercise of market power. We rationalize these changes in a simple theoretical model that allows us to analyze the tightening of liquidity requirements for banks and find that a higher Lerner index implies more market power in the loan market than in the deposit market.

Keywords: Competition; Banking sector; Liquidity regulation (search for similar items in EconPapers)
JEL-codes: E44 G21 L13 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2025-05-08
New Economics Papers: this item is included in nep-com and nep-ind
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Persistent link: https://EconPapers.repec.org/RePEc:col:000089:021371

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