Profits and "contestability": state-by-state evidence from banking markets

Contestability in local banking markets is tested using a structure-performance (S-P) model. OLS and TSLS tests using a 38 state sample of 5,396 banks in 1,474 markets reveal a positive concentration-profitability relationship. This implies that local banking markets are not contestable. However, tests for each state separately show that the S-P relationship exists only in approximately one-fifth of states. F-tests indicate that using a national pooled sample is inappropriate. The results suggest that market structure, including entry conditions, affect performance, consequently the theory of potential competition is more relevant than contestability theory. However, generalizations may be inaccurate.     

Competition and stability in modern banking: A post-crisis perspective

Competition has been suppressed for extended periods in banking and when it has been unleashed, financial stability has suffered. This paper elucidates the relationship between competition and stability in modern banking, with particular attention to the impact of digital technologies, and derives the policy consequences for regulation and competition policy.     

Market power and banking failures

We investigate whether more competition in the banking industry necessarily results in a higher probability of banking failures, as it is often suggested. In our model borrowers face a moral hazard problem, which induces banks to choose between costly monitoring and credit rationing. We show that investment decreases with the lending rate and increases with monitoring effort. Since incentives to monitor are enhanced by market power, the relationship between market structure and investment is ambiguous. In the presence of non-diversifiable risk and decreasing returns to scale, more investment implies higher failure rates. As a result, the relationship between market power and banking failures is ambiguous.     

Managerial ties, control and deregulation: An investigation of business groups entering the deregulated banking industry in Taiwan

This study investigates the determinants of business groups’ entry to the deregulated banking industry in Taiwan, from the perspectives of social capital and agency theory. The principal objective of deregulation is to increase the efficiency of resource utilization by introducing competition. However, the opportunities inherent in deregulation may induce a battle of strengths among interested business groups. Based on secondary data analysis, this study reveals that the managerial ties possessed by key individuals in a business group, and the degree of overlapping investment between the owner-managers, influences the likelihood of whether or not a business group will decide to enter the deregulated banking industry. The results of this study provide a valuable starting point from which to discuss the influence of internal and external personal networks on business strategy during a time of deregulation.

Potential competition and the factors influencing banking concentration

Multiple regression analysis is used to study the factors influencing market concentration in urban banking markets. The results indicate that independentde novo entry and shifts in population from the central city to the suburbs can be important deconcentrating factors in urban banking markets. In terms of the potential competition doctrine, the results suggest that attractive banking markets are likely to attract enough actual and potential entrants to mitigate any problems associated with a leading bank acquisition by a potential entrant. On the other hand, potential competition is more likely to be an issue in less attractive banking markets where the probability of entry is low.     

Competition in Local Markets: Some Evidence from the Spanish Retail Banking Market

Using the entry threshold concept developed by Bresnahan and Reiss (Brookings Pap Econ Act 3:833–882, 1987), this paper examines how competitive conditions vary in independent local banking markets when the number of depository branches grows. With data on the Spanish retail banking sector in 2003, I estimate a discrete choice model to calculate the entry thresholds. The empirical evidence suggests that the entry of a new branch implies competition on a local level. Local branches seem to have some scope for changing prices fixed on national and regional levels. Moreover, the entry of new branches increases the competition among branches with instruments other than price (e.g., advertising, location, and promotion).      

RESOURCE AND MARKET BASED DETERMINANTS OF PERFORMANCE IN THE U.S. BANKING INDUSTRY

This paper explores the implications of studying industry competitive patterns at the level of resource accumulation and the relationship between resource endowments and firm performance outcomes in the U.S. banking industry. It uses the strategic group framework to evaluate two models of rivalry and performance and concludes by discussing the implications of the findings for competitive analysis, strategic group theory and the banking industry.     

Interfirm coopetition,interfirm knowledge creation,and collaborative innovation performance: The moderating roles of environmental competitiveness and dysfunctional competition

This paper investigates whether and how interfirm coopetition—the combination of cooperation and competition—affects collaborative innovation performance in competitive environments. We address this issue by introducing interfirm knowledge creation as a mediating mechanism based on knowledge creation theory and by examining the moderating effects of environmental competitiveness and dysfunctional competition. The hypotheses are tested using survey data from a sample of 170 Chinese high-tech firms. The results show that interfirm knowledge creation mediates the impact of interfirm coopetition on collaborative innovation performance. Furthermore, the findings indicate that the positive relationship between interfirm coopetition and interfirm knowledge creation is stronger under higher levels of environmental competitiveness but weaker under higher levels of dysfunctional competition. The positive relationship between interfirm knowledge creation and collaborative innovation performance is more evident under higher levels of environmental competitiveness. These findings enrich the interfirm coopetition literature, contribute to knowledge creation theory by extending it to the interfirm context, and provide a better understanding and useful advice for enterprise managers and government officials.     

货币供给量与影子银行、通货膨胀的关系——基于可变参数状态空间模型的实证检验

为了提高货币政策的可操作性,为货币政策的制定提供更加明确的方向,运用平稳性检验、协整关系检验、Granger因果关系检验等方法,基于可变参数的状态空间模型,研究货币供给量与影子银行、通货膨胀之间的动态变化关系,确定弹性系数的大小。研究发现,货币供应量的通货膨胀弹性系数呈现出明显的下降趋势,通货膨胀的影响逐渐降低;货币供应量的影子银行弹性系数呈上升趋势,影子银行的影响力越来越大。对三者关系进行研究所获得的结论有利于加强对影子银行的监管,提高货币政策实施的有效性。     

A note on the market share-profitability relationship

This study extends earlier empirical work to determine whether there is a breakpoint or critical level in the frequently observed relationship between firm market share and profit rate. The analysis focuses on the banking industry and uses a sample of 10,690 firms located in 2165 different local geographic markets. Though the results apply directly only to banking, the similarity of findings on various other industrial organization topics in banking and the industrial sector suggests that the results of this study will be broadly relevant to the industrial sector.The main findings of the study are that (1) in general, firm market share is directly related to profitability; (2) the firm market share variable remains positive and significant when controlling for market concentration either with concentration as a separate independent variable or by conducting tests with subsamples of firms that are in markets with similar concentration ratios; and (3) while there is no sharp breakpoint in the market share-profitability relationship, the results indicate that profit rates of firms increase at a decreasing rate up to a share of about 55 percent. Since numerous studies have found that economies of scale are not particularly important in banking, it appears that the observed relationship is not due to greater efficiency with larger shares.     

RELATIONSHIPS,COMPETITION AND THE STRUCTURE OF INVESTMENT BANKING MARKETS*

It is well known that competition can destroy incentives to invest in firm‐specific relationships. This paper examines how the tension between relationships and competition is resolved in the investment banking market, which for decades has been characterized by both relationships and competition. The model studies the impact on relationships of four different dimensions of competition: non‐exclusive relationships, competition from arm's‐length intermediaries, non‐price competition, and endogenous entry. The analysis shows how market equilibrium adjusts so that relationships are sustained in the face of such competition. Banks are shown to establish relationships without either local or aggregate monopoly power. The model rationalizes two distinct empirical regularities of market structure: the invariance of market concentration to market size; and a pyramidal market structure with an oligopoly comprising similar‐sized players at the top and a large number of small banks at the bottom. The analysis may also shed light on the industrial organization of other professional service industries.     

Structure and Profitability in Banking Markets

We use the structure-performance model and regression analysis to investigate a number of analytical issues that often arise in evaluating competition in connection with bank mergers and that are generally relevant to mergers in other industries. Perhaps our most consistent and strongest finding is that the local market HHI is positively and significantly related to profitability. We also find that the number of organizations and the level of recent deposit growth may provide some additional information on the level of competition. Finally, several variables including market size, the number of large banking firms, deposits per office, and resident migration rates exhibit similar relationships to profitability in the bivariate analysis, suggesting that there may be some characteristic associated with market size, density, or attractiveness that is important for competition.     

Stage of the organizational life cycle and competition as mediators of problem perception for small businesses

An empirical study based upon a sample of 645 small businesses assesses the relationship that life cycle stage and level of competition exhibit with the problems perceived to constrain small business strategic planning. Problems have been identified as either internal (cash flow) or external (competition); they have further been classified as either situational or core problems. Among the most prevalent problems reported by decision makers are customer contact, market knowledge, marketing planning, location, and adequacy of capital. A total of 16 problem areas were identified. Traditional wisdom offers the scenario where problems faced will vary as the organization progresses through the life cycle. Much of this research refutes conventional wisdom in that level of competition was determined to have more of an impact on problem perception.     

企业的关系边界及主体关系模式的影响

在复杂适应系统理论视角下,企业是由投资者、经营管理者、员工以及供应商、消费者、规制者等利益相关者(主体)组成的关系网络,因此,企业的边界取决于不同利益相关者共同构成的关系网络。然而,关系网络的限度与范围又取决于利益相关者之间的关系模式。本文通过构建企业的多主体模型,借助计算机仿真软件NetLogo,动态模拟了构成企业的不同主体的关系模式对企业的关系边界的影响。研究结果表明,主体之间的竞争与合作关系对企业的关系边界有着重要影响:合作依赖模式下,企业关系边界有缩小的趋势;竞争对抗模式下,企业关系边界有增长的趋势,但是增速缓慢;竞合互动模式下,企业关系边界有快速扩张的趋势。     

The Influence of Credit Union and Savings and Loan Competition on Bank Deposit Rates in Idaho and Montana

This study examines the effect of S & L and credit union competition on bank behaviorin Idaho and Montana. A structure-performance OLSmodel is used to estimate bank interest rates oncertain deposits. Two key independent variables arelocal market share of credit unions and S & Ldeposits. Overall, previous studies found littleevidence that thrift competition affects bankperformance. We found some evidence that thriftcompetition, especially from credit unions, resultsin higher interest rates for bank CDs. Theseresults have policy implications as banking groupscurrently seek to restrict credit union competition.     

Analysis of Canadian and Mexican banking strategies in the U.S.

This article reviews regulations and commercial banking structures in Mexico, Canada and the U.S., and examines the comparative operations of Canadian and Mexican bank affiliates in the U.S. vis-a-vis each other and also with U.S. commercial banks of comparable size serving the same markets. Results obtained regarding significant differences in the operations of these banks appear to be consistent with the nascent FDI theory of multinational banking. International survey results regarding bank managers' perceptions and decision criteria suggest that this variable should also be incorporated in the evolving theory.     

Using information‐processing theory to understand planning/performance relationships in the context of strategy

This study reveals the importance of viewing planning processes within the context of strategic orientation. Information‐processing theory is used to examine the differences in planning processes given variable strategy content in the banking industry. Findings suggest that banks implementing different strategies require their planning systems to focus on different kinds and amounts of information. Moreover, the relationship between planning and bank performance is clarified when information requirements of a specific strategy are considered. It appears the strategy moderates the relationship between planning and performance. Copyright © 1999 John Wiley & Sons, Ltd.     

我国商业银行市场结构现状分析及其优化研究

本文基于我国13家商业银行2000-2006年的面板数据。对我国商业银行业市场结构、绩效等情况进行实证分析。得出我国商业银行业市场集中度趋于下降.我国银行的垄断状态逐渐被打破。在商业银行市场结构与银行绩效的回归结果上表现为:伴随着市场集中度下降,各商业银行绩效得到提高;商业银行资产规模对其绩效带来负的影响;银行管理水平、创利能力对其绩效产生显著的正向影响;产品差异化与银行绩效则显示弱的正向关系。本文认为完善银行业微观基础、降低政策性市场壁垒、提高银行差异化产品的服务能力、拓展银行国际业务等是我国银行市场结构优化的方向。     

Walking the tight rope of coopetition: Impact of competition and cooperation intensities and balance on firm innovation performance

This study empirically investigates an important question in the coopetition literature: to what extent does coopetition impact a firm's innovation performance? With a focus on the intensity of competition and intensity of cooperation of a focal firm with its alliance partners, our theory proposes that a moderate level of competition with alliance partners is more beneficial than a very high or a very low level of competition. We further develop the concept of “balance” in coopetition and examine how the interplay of competition and cooperation and the balance between the two matter for innovation performance. Results from our empirical study using data from the semiconductor industry show that competition and cooperation intensities have non-monotonic positive relationship with firm's coopetition-based innovation performance. Further, balanced coopetition (i.e., when competition is moderately high and cooperation is high) has a positive effect on innovation performance. A key contribution of this paper is the conceptualization and empirical demonstration of the effects of various aspects of coopetition such as competition dominant, cooperation dominant, and balanced coopetition on innovation performance.     

基于DEA 模型的我国上市商业银行竞争力分析

金融业竞争的日益市场化与国际化以及基于技术创新的金融业快速发展,使得我国竞争力本来就不强的银行业深受冲击。因此,我国银行业必须不断提升自主创新能力,提高市场竞争力,以便构筑起可持续发展的能力。本文试图用数据包络方法(DEA) 对我国16 家上市商业银行竞争力进行实证分析,期望能够对我国商业银行竞争力的提升有一定的借鉴意义。