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Explanatory Factors Of Market Power In The Banking System

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  • JUAN FERNÁNDEZ DE GUEVARA
  • JOAQUÍN MAUDOS

Abstract

The aim of the study is to analyse the explanatory factors of market power in the banking system. Using as laboratory the Spanish banking system in the period 1986–2002, results show an increase of market power from the mid‐1990s. Of the set of variables that the model posits as explaining market power, those with the greatest explanatory power are size, efficiency and specialization; concentration is not significant. This last result shows the limitations of the approaches, studies and decision‐making rules of economic policy that uses market concentration as a proxy for the degree of competition.

Suggested Citation

  • Juan Fernández De Guevara & Joaquín Maudos, 2007. "Explanatory Factors Of Market Power In The Banking System," Manchester School, University of Manchester, vol. 75(3), pages 275-296, June.
    • Handle: RePEc:bla:manchs:v:75:y:2007:i:3:p:275-296
    DOI: 10.1111/j.1467-9957.2007.01017.x
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    1. Efc, 2002. "Report on EU financial integration," European Economy - Economic Papers 2008 - 2015 171, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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    4. Philipp Hartmann & Angela Maddaloni & Simone Manganelli, 2003. "The Euro-area Financial System: Structure, Integration, and Policy Initiatives," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(1), pages 180-213.
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