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New evidence on assessing the level of competition in the European Union banking sector: A panel data approach

Nicholas Apergis (), Irene Fafaliou () and Michael Polemis ()

International Business Review, 2016, vol. 25, issue 1, 395-407

Abstract: The goal of this paper is to empirically assess the level of banking competition in the European Union (EU) across three economic blocks (i.e. EU-27, EMU-17 and the remaining EU countries). Furthermore, the paper assesses the impact of the on-going financial crisis (2008–2011) on the competition pattern of the banking sector in the European Monetary Union (EMU) as a whole, where little attention has been paid by the relevant literature. The analysis employs the Panzar and Rosse ((1987). Journal of Industrial Economics, 35, 443) methodology and draws upon a panel dataset of EU banks, spanning the period 1996–2011. The empirical findings are robust, providing updated evidence in favour of a monopolistic competition pattern across all EU economic blocks examined. The level of competition in the EMU countries triggered by bank consolidations seems to have undergone a small, albeit a significant decline, after the adoption of the euro currency and the on-going financial crisis.

Keywords: Banking; Monopolistic competition; Panel data; Panzar-Rosse index; Financial crisis (search for similar items in EconPapers)
JEL-codes: G21 C23 L10 (search for similar items in EconPapers)
Date: 2016
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