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A revenue-based frontier measure of banking competition

Santiago Carbo-Valverde, David B. Humphrey and Francisco Rodriguez-Fernandez
Authors registered in the RePEc Author Service: Francisco Rodríguez Fernández () and Santiago Carbo Valverde ()

No 10-9, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Measuring banking competition using the HHI, Lerner index, or H-statistic can give conflicting results. Borrowing from frontier analysis, the authors provide an alternative approach and apply it to Spain over 1992-2005. Controlling for differences in asset composition, productivity, scale economies, risk, and business cycle influences, they find no differences in competition between commercial and savings banks nor between large and small institutions, but the authors conclude that competition weakened after 2000. This appears related to strong loan demand where real loan-deposit rate spreads rose and fees were stable for activities where scale economies should have been realized.

Keywords: Bank; competition (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-ban, nep-com and nep-eff
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