A Revenue-Based Frontier Measure of Banking Competition
- Carbó Valverde, Santiago
- Humphrey, David B.
- Rodríguez, Francisco
ISSN: 1988-8767
Año de publicación: 2010
Número: 495
Tipo: Documento de Trabajo
Otras publicaciones en: Notas técnicas: [continuación de Documentos de Trabajo FUNCAS]
Resumen
Measurement of banking competition using the HHI, Lerner Index, or H-statistic can give conflicting results. Borrowing from frontier analysis, we 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, we find no differences in competition between commercial and savings banks, between large and small institutions, but 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.