Impact of bank competition on the interest rate pass-through in the euro area

Leuvensteijn, Michiel van; Sørensen, Christoffer Kok; Bikker, Jacob A.; Rixtel, Adrian A. R. J. M. van

doi:10.1080/00036846.2011.617697

Cited by 223 publications

(124 citation statements)

References 51 publications

Supporting

Mentioning

111

Contrasting

Unclassified

Order By: Relevance

“…In this section we briefly discuss the methodology presented in Leuvensteijn et al (2008) and Schaeck and Cihak (2010), who use the method of Boone et al (2005) and Boone (2008) to estimate market power in the banking sector. We assume that each bank i in an industry (country) c produces one symmetrically differentiated product q at time t and faces a demand ( , )…”

Section: The Boone Indicatormentioning

confidence: 99%

“…(1) Estimation of the competitive conditions in the banking industry has attracted the interest of many researchers over the last three decades (for a recent review see Carbo et al, 2009). Here, we primarily resort to the method proposed by Boone (2008) and applied to the banking sector by Leuvensteijn et al (2008) and Schaeck and Cihak (2010). This method possesses some significant advantages over other estimators of bank competition, at least for our purposes.…”

Section: Empirical Model and Estimation Of Bank Market Powermentioning

confidence: 99%

“…(5) requires data on marginal cost, which is generally not available. Leuvensteijn et al (2008) estimate marginal cost at the industry level and Schaeck and Cihak (2010) use data on average cost. Both studies obtain an estimate of the competitive conditions prevailing at the country level.…”

Section: Estimating the Boone Indicator At The Bank-levelmentioning

confidence: 99%

See 2 more Smart Citations

Bank competition, financial reform, and institutions: The importance of being developed

Delis¹

2012

Journal of Development Economics

185

115

View full text Add to dashboard Cite

In this paper we estimate the degree of market power at the bank-level for 84 banking systems worldwide. Subsequently, we analyze the sources of bank competition, placing emphasis on the impact of financial reform and the quality of institutions. We find that financial liberalization policies reduce the market power of banks in developed countries with advanced politico-institutional milieus. In contrast, banking competition does not improve at the same pace in countries with weaker institutions and a lower level of economic development. The results hold across a wide array of identification tests and estimation methods. The main policy implication to be drawn is that a certain level of institutional maturity is a precondition for the success of reforms aimed at enhancing competition and efficiency of banking markets.JEL Classifications: P4; G2 ; L1 ; C1

show abstract

Section: The Boone Indicatormentioning

confidence: 99%

Section: Empirical Model and Estimation Of Bank Market Powermentioning

confidence: 99%

See 1 more Smart Citation

Bank competition, financial reform, and institutions: The importance of being developed

Delis¹

2012

Journal of Development Economics

185

115

View full text Add to dashboard Cite

show abstract

“…The use of average costs as a proxy for marginal costs creates an endogeneity problem in all regressions (Leuvensteijn et al (2008)). Since average costs are used to compute profits, they are present in both sides of the regression, potentially misleading competition assessment.…”

Section: Robustnessmentioning

confidence: 99%

Competition in the Portuguese economy: insights from a profit elasticity approach

Amador

Soares

2016

Empirica

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. All rights reserved. Terms of use: Documents in ISSN 1725-2806 (online) EU Catalogue NoQB-AR-13-100-EN-N (online)Any reproduction, publication and reprint in the form of a different publication, whether printed or produced electronically, in whole or in part, is permitted only with the explicit written authorisation of the ECB or the authors. The refereeing process of this paper has been coordinated by Editorial Board of the ECB Working Paper Series, led by Philipp Hartmann.The paper is released in order to make the research of CompNet generally available, in preliminary form, to encourage comments and suggestions prior to final publication. The views expressed in the paper are the ones of the author(s) and do not necessarily reflect those of the ECB, the ESCB, and of other organisations associated with the Network. AcknowledgementsThe opinions expressed in this paper are those of the authors and do not necessarily coincide with those of Banco de Portugal or the Eurosystem. The usual disclaimers apply. The authors thank an anonymous referee for useful comments on a previous version of the paper. (2008), which draws on the concept of profit elasticity to marginal costs. In addition, robustness of results across econometric specifications is discussed, along with their consistency with classical competition indicators. The article concludes that the majority of Portuguese markets exhibited a reduction in competition in the period 2000-2009, though there is substantial heterogeneity. In addition, markets that faced competition reductions represent the large majority of sales, gross value added and employment in the Portuguese economy. The non-tradable sector shows lower competition intensity than the tradable sector. Moreover, reductions in competition are relatively widespread across markets in both sectors, but in terms of sales, gross value added and employment these reductions are more substantial in the non-tradable sector. In the majority of markets the assessment on the evolution of competition using profit elasticities is similar to that obtained with classical competition indicators. João Amador

show abstract

“…While it is commonly acknowledged that the effectiveness of monetary policy may vary across countries (van Leuvensteijn et al, 2008;Sorensen and Werner, 2006;Sander and Kleimeier, 2006Mojon, 2000;Cottarelli and Kourelis, 1994), the possibility that the nature of interest pass-through process could be heterogeneous at the intra-national level received much less attention. One of the possible reasons is the constraints posed by data limitations at a regional level, see e.g.…”

Section: Introductionmentioning

confidence: 99%

Regional Interest Rate Pass-Through in Italy

2015

View full text Add to dashboard Cite

This paper estimates the pass-through and speed of adjustment of Italian regional interest rates to changes in the money market rate for the period 1998Q1-2009Q4. The main findings suggest that the markup for the lending rates that banks charge are generally higher in the South than in the North. Moreover, the empirical results indicate that the pass-through tends to be longer in Southern regions. Furthermore, this paper finds a little support for the hypothesis that regional banks react asymmetrically when adjusting their loan rates when these are above or below equilibrium levels, but detects some evidence supporting an upward rigidity in the regional deposit rates.

show abstract

Impact of bank competition on the interest rate pass-through in the euro area

Cited by 223 publications

References 51 publications

Bank competition, financial reform, and institutions: The importance of being developed

Bank competition, financial reform, and institutions: The importance of being developed

Competition in the Portuguese economy: insights from a profit elasticity approach

Regional Interest Rate Pass-Through in Italy

Contact Info

Product

Resources

About