What affects bank market power in the euro area? A country-level structural model approach

Date

2021

Authors

Coccorese, Paolo
Girardone, Claudia
Shaffer, Sherrill

Journal Title

Journal ISSN

Volume Title

Publisher

Pergamon Press

Abstract

In this study we explore market power in 13 euro area banking sectors for the years 2007 to 2019 by means of a structural model framework with demand and supply equations, where the mark-up of price over marginal cost is parameterized as a measure of banks’ conduct that depends on selected factors. Our evidence indicates that EU banks enjoy a significant degree of market power, which shows a decreasing trend over time and some difference across countries. More competition is associated with higher bank density, lower bank capitalization, more efficient and stable banking systems, better macroeconomic conditions, and the establishment of the SSM. Finally, a clear convergence pattern emerges in the behaviour of EU banks.

Description

Keywords

Banking, Market power, European integration

Citation

Source

Journal of International Money and Finance

Type

Journal article

Book Title

Entity type

Access Statement

License Rights

DOI

10.1016/j.jimonfin.2021.102443

Restricted until

2099-12-31