What Drives Bank Competition? Some International Evidence

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.

Bibliographic Details

Main Authors:	Claessens, Stijn, Laeven, Luc
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2003-08
Subjects:	BANKING SYSTEMS, INPUTS, REVENUE SOURCES, PRICE INDEXES, COMPETITIVENESS, FOREIGN BANKS, PERFORMANCE INDICATORS, BANKING REGULATIONS, CONTESTABILITY ASSETS, BANK HOLDING COMPANIES, BANK LENDING, BANK REGULATION, BANKING INDUSTRY, BANKING SECTOR, BANKING SERVICES, BANKING STRUCTURE, BANKING SYSTEM, BANKS, CAPITAL MARKETS, CAPITALIZATION, COLLUSION, COMMERCIAL BANKS, COMPETITION POLICY, COMPETITIVE PRICE, CONCENTRATION INDEXES, CONSOLIDATION, CONTESTABILITY, CONTESTABLE MARKETS, COOPERATIVE BANKS, DEPOSITS, DEREGULATION, DEVELOPED COUNTRIES, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC STABILITY, ELASTICITIES, ELASTICITY, EMPIRICAL RESEARCH, EMPIRICAL STUDIES, EQUILIBRIUM, EXPENDITURES, FINANCIAL INSTITUTIONS, FINANCIAL INTERMEDIATION, FINANCIAL MARKETS, FINANCIAL SECTOR, FINANCIAL SERVICES, FINANCIAL SYSTEMS, GDP, GDP PER CAPITA, HOME MARKET, IMPERFECT COMPETITION, INEFFICIENCY, INFLATION, INFLATION RATE, INPUT PRICES, INSURANCE, INSURANCE INDUSTRY, INSURANCE PREMIUMS, INTEREST EXPENSE, INTEREST RATE, INTEREST RATES, MARGINAL COSTS, MARGINAL REVENUE, MARKET CONCENTRATION, MARKET EQUILIBRIUM, MARKET POWER, MARKET STRUCTURE, MONOPOLISTIC COMPETITION, MONOPOLY, NET INTEREST MARGIN, OLIGOPOLY, PER CAPITA INCOME, PERFECT COMPETITION, PRODUCTION FUNCTION, PROFITABILITY, PROPERTY RIGHTS, REGULATORY REGIMES, RETURN ON ASSETS, SAVINGS, SAVINGS BANKS, SECURITIES, SECURITIES MARKETS, SMALL BANKS, STOCK MARKETS, SUPERVISORY AGENCIES, TAXATION, TECHNOLOGICAL PROGRESS, TOTAL REVENUE, TRANSITION ECONOMIES, ASSETS,
Online Access:	http://documents.worldbank.org/curated/en/2003/08/2494638/drives-bank-competition-some-international-evidence http://hdl.handle.net/10986/18121
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