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Diversification, multimarket contacts and profits in the leasing industry

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  • Degl’Innocenti, Marta
  • Girardone, Claudia
  • Torluccio, Giuseppe

Abstract

This paper examines the competitive dynamics and multimarket characteristics of the Italian leasing industry. We employ a GMM-system estimator for dynamic panel analysis using a unique dataset over 2002–2008. Our main findings suggest that there is no evidence of tacit collusion in the Italian leasing sector thus rejecting the hypothesis that mutual forbearance affects market conditions through greater multimarket contact. The study offers no support to the assumption that similarity among firms facilitates collusive behaviour. Finally, the analysis reveals that on average the most profitable leasing firms are less diversified and have a better risk profile.

Suggested Citation

  • Degl’Innocenti, Marta & Girardone, Claudia & Torluccio, Giuseppe, 2014. "Diversification, multimarket contacts and profits in the leasing industry," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 31(C), pages 231-252.
    • Handle: RePEc:eee:intfin:v:31:y:2014:i:c:p:231-252
    DOI: 10.1016/j.intfin.2014.04.001
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    More about this item

    Keywords

    Diversification; Multimarket contact; Leasing industry; Dynamic panel data; Lerner Index of monopoly power;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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