Demand for Bank Services and Market Power in Brazilian Banking

Marcio Nakane, Leonardo Alencar and Fabio Kanczuk

No 107, Working Papers Series from Central Bank of Brazil, Research Department

Abstract: We use bank-level data to model the demand for bank services in Brazil following the discrete choice literature. A multinomial logit specification is used to study the demand for time deposits, for an aggregate of demand and passbook savings deposits, and for loans. Market for each of these products is defined at the municipality level. In the supply side, we find the absolute price-cost margins consistent with Bertrand competition and with cartel. Our results suggest that even Bertrand competition overestimates the degree of market power in the Brazilian banking industry.

Date: 2006-06
New Economics Papers: this item is included in nep-ban, nep-com, nep-dcm and nep-mic
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Citations: View citations in EconPapers (38)

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