Using market structure to assess differentiation between retail depository institutions

Andrew M. Cohen and Michael Mazzeo
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Andrew M. Cohen: https://www.federalreserve.gov/econres/andrew-m-cohen.htm

No 940, Proceedings from Federal Reserve Bank of Chicago

Abstract: We assess the competitive impact that single-market banks and thrift institutions have on multi-market banks (and vice-versa) in 1,884 non-MSA markets. We estimate a model of equilibrium market structure which endogenizes entry for three types: multi-market banks, single-market banks, and thrift institutions. Observed market structures and the solution to an entry-type game identify the parameters of a latent (unobserved) profit function. We find significant evidence of product differentiation ? particularly in the case of thrifts. Furthermore, product differentiation appears to depend upon differences in market geography.

Keywords: Banking market; Banking structure; Bank deposits (search for similar items in EconPapers)
Pages: 255-266
Date: 2004
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Published in Conference on Bank Structure and Competition (2004 : 40th) ; How do banks compete? strategy, regulation, and technology

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedhpr:940

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