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Market power evolution and convergence in European banking: An empirical note

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  • Canan Yildirim
  • Adnan Kasman

Abstract

This paper undertakes an up‐to‐date assessment of evolution and convergence in market power over 2013 and 2018 in the Eurozone banking markets in view of the progress towards completing the banking union. The results show that average market power measured by the Lerner index displays an upward trend up until 2016 declining thereafter. Further findings by employing the panel convergence methodology of Philips and Sul (2007) fail to support the hypothesis of integration in the Eurozone banking markets through market power convergence. Furthermore, club clustering tests reveal presence of three sub‐clusters of countries with different speeds of convergence.

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  • Canan Yildirim & Adnan Kasman, 2021. "Market power evolution and convergence in European banking: An empirical note," Bulletin of Economic Research, Wiley Blackwell, vol. 73(4), pages 535-544, October.
    • Handle: RePEc:bla:buecrs:v:73:y:2021:i:4:p:535-544
    DOI: 10.1111/boer.12262
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    1. Peter C. B. Phillips & Donggyu Sul, 2009. "Economic transition and growth," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(7), pages 1153-1185, November.
    2. Matousek, Roman & Rughoo, Aarti & Sarantis, Nicholas & George Assaf, A., 2015. "Bank performance and convergence during the financial crisis: Evidence from the ‘old’ European Union and Eurozone," Journal of Banking & Finance, Elsevier, vol. 52(C), pages 208-216.
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    Cited by:

    1. Burkhard Raunig & Michael Sigmund, 2023. "Watching over 21,000 Billion Euros: Does the ECB Single Supervisory Mechanism Affect Bank Competition in the Euro Area? (Burkhard Raunig, Michael Sigmund)," Working Papers 250, Oesterreichische Nationalbank (Austrian Central Bank).

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