A Test of Perfect Competition in the UK Retail-banking Deposit Market

This article presents a test for perfect competition in the deposit market of the UK retail-banking sector. The model employed draws from the New Economic Industrial Organisation (NEIO) technique forwarded by Hannan and Liang 1993]. The test is applied to a sample of eight UK retail banks between 1992-97. The presence of perfect competition is rejected for all banks. The empirical evidence does not support qualitative evidence of increasing competitiveness amongst UK retail banks.