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New evidence on assessing the level of competition in the European Union banking sector: A panel data approach

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  • Apergis, Nicholas
  • Fafaliou, Irene
  • Polemis, Michael L.

Abstract

The goal of this paper is to empirically assess the level of banking competition in the European Union (EU) across three economic blocks (i.e. EU-27, EMU-17 and the remaining EU countries). Furthermore, the paper assesses the impact of the on-going financial crisis (2008–2011) on the competition pattern of the banking sector in the European Monetary Union (EMU) as a whole, where little attention has been paid by the relevant literature. The analysis employs the Panzar and Rosse ((1987). Journal of Industrial Economics, 35, 443) methodology and draws upon a panel dataset of EU banks, spanning the period 1996–2011. The empirical findings are robust, providing updated evidence in favour of a monopolistic competition pattern across all EU economic blocks examined. The level of competition in the EMU countries triggered by bank consolidations seems to have undergone a small, albeit a significant decline, after the adoption of the euro currency and the on-going financial crisis.

Suggested Citation

  • Apergis, Nicholas & Fafaliou, Irene & Polemis, Michael L., 2016. "New evidence on assessing the level of competition in the European Union banking sector: A panel data approach," International Business Review, Elsevier, vol. 25(1), pages 395-407.
    • Handle: RePEc:eee:iburev:v:25:y:2016:i:1:p:395-407
    DOI: 10.1016/j.ibusrev.2015.07.003
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    More about this item

    Keywords

    Banking; Monopolistic competition; Panel data; Panzar-Rosse index; Financial crisis;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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