A Structural Empirical Analysis of Retail Banking Competition: the Case of Hungary
Jozsef Molnar (),
Márton Nagy () and
Csilla Horváth ()
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Márton Nagy: Magyar Nemzeti Bank
Csilla Horváth: Radboud University Nijmegen, The Netherlands
No 2007/1, MNB Working Papers from Magyar Nemzeti Bank (Central Bank of Hungary)
In this paper we analyze the degree of competition in the Hungarian household credit and deposit markets. We estimate discrete-choice, multinomial logit deposit service and loan demand functions for each bank and calculate the corresponding price elasticities. Two models of the banking industry are considered: a static, differentiated product Nash-Bertrand oligopoly (as non-collusive benchmark) and a cartel. With estimated marginal costs and observed interest rates we calculate the price-cost margins and compare these to the theoretically implied ones. We find that in our sample period the competition in the Hungarian banking sector is low, i.e. price-cost margins are high.
Keywords: Demand; discrete choice; product differentiation; banking; market power. (search for similar items in EconPapers)
JEL-codes: G21 L11 L13 (search for similar items in EconPapers)
Pages: 44 pages
New Economics Papers: this item is included in nep-ban, nep-com, nep-dcm and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:mnb:wpaper:2007/1
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