Bank competition and the transmission of unconventional monetary policy in the euro area

Barbara Baarsma and Melvin Vooren

European Competition Journal, 2018, vol. 14, issue 1, 174-193

Abstract: We analyse the relation between bank competition and the transmission of unconventional monetary policy (UMP) for 14 European countries. We estimate an error-correction model to analyse the relation between the pass-through of UMP to long-term commercial interest rates and the level of competitiveness. We estimate this model for three different measures: the Herfindahl Index (HHI), the Boone indicator and the H-statistic. Our results indicate that bank concentration as measured by the HHI is not a good proxy of competitive conditions in the market, whereas the other two measures are more meaningful in this context. The pass-through of UMP is increasing in the degree of bank competition as measured by the Boone indicator and the H-statistic. The relationship between pass-through and the level of market concentration is less well defined, suggesting that competition and market concentration do not go hand in hand in the banking sector.

Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1080/17441056.2018.1463688 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:recjxx:v:14:y:2018:i:1:p:174-193

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/recj20

DOI: 10.1080/17441056.2018.1463688

Access Statistics for this article

European Competition Journal is currently edited by Philip Marsden

More articles in European Competition Journal from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().