Market Power in European Banking Sectors |
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Authors: | Juan Fernández de Guevara Joaquín Maudos Francisco Pérez |
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Institution: | (1) Instituto Valenciano de Investigaciones Economicas (Ivie), Spain;(2) Universitat de València, Spain |
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Abstract: | We analyze the evolution of market power in the main banking sectors of the European Union. The evolution of the relative margins does not show an increase in the degree of competition within the EU. The explanatory factors of the relative margins most directly related to market power are not significant, and even have a negative influence (concentration in the deposits market). The size and efficiency of banks, default risk, and the economic cycle have a notable capacity to explain the behavior of the market power. The results show the inadequacy of using concentration measures as proxy for the competition environment in banking markets. |
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Keywords: | Market power competition European banking sectors |
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