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Measuring multi-product banks' market power using the Lerner index

Shaffer, Sherrill; Spierdijk, Laura

Description

The aggregate Lerner index is a popular composite measure of multi-product banks’ market power, based on total assets as the single aggregate output factor. We show that the aggregate Lerner index only qualifies as a consistently aggregated Lerner index if three conditions hold. Under these conditions, the aggregate Lerner index reduces to a weighted-average of the product-specific Lerner indices. We test the three conditions for a sample of U.S. banks covering the years 2011–2017. All three...[Show more]

CollectionsANU Research Publications
Date published: 2020
Type: Journal article
URI: http://hdl.handle.net/1885/264071
Source: Journal of Banking and Finance
DOI: 10.1016/j.jbankfin.2020.105859
Access Rights: Open Access

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