Competition in banks’ lending business and its interference with ECB monetary policy

Patrick Brämer, Horst Gischer, Toni Richter and Mirko Weiß

Journal of International Financial Markets, Institutions and Money, 2013, vol. 25, issue C, 144-162

Abstract: Our paper calls attention to the heterogeneous levels of competition in EMU banking systems. Employing a modified Lerner Index, our methodically unique data set enables us to calculate banks’ pricing power in the national lending business alone, instead of measuring market power for banks’ total business. We document that market power in the exclusive segment of lending is greater than market power in total banking business. In an OLS regression model for the period 2003–2009, we find that changes in competition considerably affect funding conditions in the individual countries and therefore interfere with a homogeneous transmission of ECB monetary policy.

Keywords: Banking competition; European Monetary Union; Lerner Index; Monetary policy (search for similar items in EconPapers)
JEL-codes: E43 E52 E58 L16 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:25:y:2013:i:c:p:144-162

DOI: 10.1016/j.intfin.2013.01.009

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