Competition in the Colombian Banking Sector

David Perez-Reyna, Tomás Rodríguez Barraquer and Jorge Tovar

No 14045, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: In this paper, we analyze the competition in the Colombian banking sector using bank-level monthly balance sheet information. We estimate the changes in measures of market power due to the exogenous introduction of a liquidity regulation. Our results suggest that introducing a net stable funding ratio increased the Lerner index in the short term, thus signaling a higher exercise of market power. We rationalize these changes in a simple theoretical model that allows us to analyze the tightening of liquidity requirements for banks. Our empirical results are consistent with banks with higher market power in the loan market than in the deposit market.

Keywords: Competition; Banking sector; Liquidity regulation (search for similar items in EconPapers)
JEL-codes: E44 G21 L13 (search for similar items in EconPapers)
Date: 2025-03
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:14045

DOI: 10.18235/0013441

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