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Strategic and Queue effects on Entry in Spanish Banking

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  • Lucio Fuentelsaz
  • Jaime Gomez

Abstract

This paper analyzes the factors that influence entry and geographic diversification decisions, a topic of special strategic interest in a context of growing globalization. The empirical model we propose is tested in a framework— the Spanish savings‐bank market—where recent deregulation has eliminated the legal barriers to entry. Our results show two important conclusions for the evolution of the effects of branching deregulation in Europe and the US. First, it seems that entry in new geographical markets has been impeded by the strategic interactions between entrants and incumbents. Second, savings banks exhibit a preference for closer locations at the time of expanding, which may have undermined the effects of deregulation and its potential benefits for consumers.

Suggested Citation

  • Lucio Fuentelsaz & Jaime Gomez, 2001. "Strategic and Queue effects on Entry in Spanish Banking," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(4), pages 529-563, December.
    • Handle: RePEc:bla:jemstr:v:10:y:2001:i:4:p:529-563
    DOI: 10.1111/j.1430-9134.2001.00529.x
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    Cited by:

    1. Carbo Valverde, Santiago & Fernández de Guevara y Rodoselovics, Juan & Humphrey, David & Maudos, Joaquin, 2009. "Estimating the intensity of price and non-price competition in banking," MPRA Paper 17612, University Library of Munich, Germany, revised 2009.
    2. Manuel Illueca & José Pastor & Emili Tortosa-Ausina, 2009. "The effects of geographic expansion on the productivity of Spanish savings banks," Journal of Productivity Analysis, Springer, vol. 32(2), pages 119-143, October.
    3. Hans Degryse & Steven Ongena, 2005. "Distance, Lending Relationships, and Competition," Journal of Finance, American Finance Association, vol. 60(1), pages 231-266, February.
    4. Rebeca de Juan, 2002. "Entry in Independent Submarkets - An Application to the Spanish Retail Banking Market," The Economic and Social Review, Economic and Social Studies, vol. 33(1), pages 109-118.
    5. Tarantino, Emanuele & Pavanini, Nicola & Mayordomo, Sergio, 2020. "The Impact of Alternative Forms of Bank Consolidation on Credit Supply and Financial Stability," CEPR Discussion Papers 15069, C.E.P.R. Discussion Papers.
    6. Hugo Fuentes & Emili Grifell-Tatjé & Sergio Perelman, 2005. "Product Specialization, Efficiency and Productivity Change in the Spanish Insurance Industry," CREPP Working Papers 0506, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
    7. Tortosa-Ausina, Emili, 2003. "Nontraditional activities and bank efficiency revisited: a distributional analysis for Spanish financial institutions," Journal of Economics and Business, Elsevier, vol. 55(4), pages 371-395.
    8. Carbo Valverde, Santiago & Fernández de Guevara y Rodoselovics, Juan & Humphrey, David & Maudos Villarroya, Joaquín, 2005. "Estimating the intensity of price and non-price competition in banking: an application to the Spanish case," MPRA Paper 15259, University Library of Munich, Germany.
    9. Lucio Fuentelsaz & Jaime Gómez, "undated". "Multipoint Competition, Mutual Forbearance and Entry into Geographic Markets," Studies on the Spanish Economy 127, FEDEA.
    10. Roberto Felici & Marcello Pagnini, 2008. "Distance, Bank Heterogeneity And Entry In Local Banking Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 56(3), pages 500-534, September.
    11. José Manuel Pastor & Jose M. Pavía & Lorenzo Serrano & Emili Tortosa-Ausina, 2017. "Rich regions, poor regions and bank branch deregulation in Spain," Regional Studies, Taylor & Francis Journals, vol. 51(11), pages 1678-1694, November.
    12. H. Evren Damar, 2009. "A Lesson Learned? Pre‐ And Postcrisis Entry Decisions In Turkish Banking," Contemporary Economic Policy, Western Economic Association International, vol. 27(1), pages 97-108, January.
    13. Luisa Alamá & Emili Tortosa-Ausina, 2012. "Bank Branch Geographic Location Patterns in S pain: Some Implications for Financial Exclusion," Growth and Change, Wiley Blackwell, vol. 43(3), pages 505-543, September.
    14. Rebeca Juan, 2008. "Competition in Local Markets: Some Evidence from the Spanish Retail Banking Market," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 32(2), pages 145-162, March.
    15. Cristina Bernad & Lucio Fuentelsaz & Jaime Gómez, 2008. "Deregulation and its Long-Run Effects on the Availability of Banking Services in Low-Income Communities," Environment and Planning A, , vol. 40(7), pages 1681-1696, July.
    16. Emili Tortosa-Ausina & David Conesa & Luisa Alamá, 2011. "Location and geographic diversification patterns of Spanish financial institutions: Implications for growth, 1989-2009," ERSA conference papers ersa10p1162, European Regional Science Association.
    17. Emili Tortosa-Ausina, 2002. "Bank Cost Efficiency and Output Specification," Journal of Productivity Analysis, Springer, vol. 18(3), pages 199-222, November.
    18. Grifell-Tatjé, E., 2011. "Profit, productivity and distribution: Differences across organizational forms - The case of Spanish banks," Socio-Economic Planning Sciences, Elsevier, vol. 45(2), pages 72-83, June.

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