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The Single Supervisory Mechanism: competitive implications for the banking sectors in the euro area

Iryna Okolelova and Jacob Bikker ()

DNB Working Papers from Netherlands Central Bank, Research Department

Abstract: This paper investigates the impact of the SSM's launch on the market power of banks in the large euro area economies. We employ the Lerner index and the Boone estimator, non-structural measures that capture different aspects of competition. Using the results of the Lerner index, we find evidence of the significant decrease in market power for the ECB supervised entities in Austria, France, Germany and Spain. In a similar vein, the Boone indicator points toward an increase in competition among significant supervised entities of Austria, France, Germany, Italy and Spain. The evidence on changes for the total banking sector are mixed, whereas no significant effect is found for the banks remaining under national supervision. We do not find any support for significant increases in the market power of banks in Italy or Spain, suggesting that large increases in concentration do not necessarily result in anticompetitive conduct.

Keywords: Banking; SSM; competition; market structure; concentration; Lerner index; Boone indicator (search for similar items in EconPapers)
JEL-codes: G21 G28 L1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-cba, nep-com and nep-eec
Date: 2018-12
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Persistent link: https://EconPapers.repec.org/RePEc:dnb:dnbwpp:621

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