What drives bank competition? some international evidence

Stijn Claessens () and Luc Laeven

No 3113, Policy Research Working Paper Series from The World Bank

Abstract: Using bank-level data, the authors apply the Panzar and Rosse (1987) methodology to estimate the extent to which changes in input prices are reflected in revenues earned by specific banks in 50 countries'banking systems. They then relate this competitiveness measure to indicators of countries'banking system structures and regulatory regimes. The authors find systems with greater foreign bank entry and fewer entry and activity restrictions to be more competitive. They find no evidence that the competitiveness measure negatively relates to banking system concentration. Their findings confirm that contestability determines effective competition, especially by allowing (foreign) bank entry and reducing activity restrictions on banks.

Keywords: Environmental Economics&Policies; Banks&Banking Reform; Payment Systems&Infrastructure; Economic Theory&Research; Labor Policies; Economic Theory&Research; Banks&Banking Reform; Environmental Economics&Policies; Financial Intermediation; Markets and Market Access (search for similar items in EconPapers)
Date: 2003-08-31
New Economics Papers: this item is included in nep-com and nep-fin
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Citations: View citations in EconPapers (59)

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Related works:
Journal Article: What drives bank competition? Some international evidence (2004)
Journal Article: What Drives Bank Competition? Some International Evidence (2004)
Working Paper: What Drives Bank Competition? Some International Evidence (2003)
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