IDEAS home Printed from https://ideas.repec.org/p/use/tkiwps/0933.html
   My bibliography  Save this paper

A Fallacy of Division: The Failure of Market Concentration as a Measure of Competition in U.S. Banking

Author

Listed:
  • J.W.B. Bos
  • I. Chan
  • J. Kolari
  • J. Yuan

Abstract

No abstract is available for this item.

Suggested Citation

  • J.W.B. Bos & I. Chan & J. Kolari & J. Yuan, 2009. "A Fallacy of Division: The Failure of Market Concentration as a Measure of Competition in U.S. Banking," Working Papers 09-33, Utrecht School of Economics.
    • Handle: RePEc:use:tkiwps:0933
    as

    Download full text from publisher

    File URL: https://dspace.library.uu.nl/bitstream/handle/1874/36723/09-33_2.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Caballero, Ricardo J. & Engel, Eduardo M. R. A., 1993. "Microeconomic rigidities and aggregate price dynamics," European Economic Review, Elsevier, vol. 37(4), pages 697-711, May.
    2. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 701-728.
    3. Shepherd, William G, 1972. "The Elements of Market Structure," The Review of Economics and Statistics, MIT Press, vol. 54(1), pages 25-37, February.
    4. David E. Buschena & Jeffrey M. Perloff, 1991. "The Creation of Dominant Firm Market Power in the Coconut Oil Export Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 1000-1008.
    5. Iwata, Gyoichi, 1974. "Measurement of Conjectural Variations in Oligopoly," Econometrica, Econometric Society, vol. 42(5), pages 947-966, September.
    6. Jan Boone, 2008. "A New Way to Measure Competition," Economic Journal, Royal Economic Society, vol. 118(531), pages 1245-1261, August.
    7. Einer Elhauge, 2007. "Harvard, Not Chicago: Which Antitrust School Drives Recent U.S. Supreme Court Decisions?," CPI Journal, Competition Policy International, vol. 3.
    8. Stijn Claessens & Luc Laeven, 2004. "What drives bank competition? Some international evidence," Proceedings, Federal Reserve Bank of Cleveland, pages 563-592.
    9. Nicola Cetorelli & Philip E. Strahan, 2006. "Finance as a Barrier to Entry: Bank Competition and Industry Structure in Local U.S. Markets," Journal of Finance, American Finance Association, vol. 61(1), pages 437-461, February.
    10. Joe S. Bain, 1951. "Relation of Profit Rate to Industry Concentration: American Manufacturing, 1936–1940," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 65(3), pages 293-324.
    11. Berger, Allen N & Hannan, Timothy H, 1989. "The Price-Concentration Relationship in Banking," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 291-299, May.
    12. R. Alton Gilbert & Adam M. Zaretsky, 2003. "Banking antitrust: are the assumptions still valid?," Review, Federal Reserve Bank of St. Louis, vol. 85(Nov), pages 29-52.
    13. Riordan, Michael H, 1998. "Anticompetitive Vertical Integration by a Dominant Firm," American Economic Review, American Economic Association, vol. 88(5), pages 1232-1248, December.
    14. John Kwoka, 1998. "Herfindahl Concentration with an Import Fringe and with Supply Constraints," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 13(4), pages 401-407, August.
    15. Marie Goppelsroeder & Maarten Pieter Schinkel & Jan Tuinstra, 2008. "Quantifying The Scope For Efficiency Defense In Merger Control: The Werden‐Froeb‐Index," Journal of Industrial Economics, Wiley Blackwell, vol. 56(4), pages 778-808, December.
    16. Erik Heitfield & Robin Prager, 2004. "The Geographic Scope of Retail Deposit Markets," Journal of Financial Services Research, Springer;Western Finance Association, vol. 25(1), pages 37-55, February.
    17. Jan Boone, 2008. "A New Way to Measure Competition," Economic Journal, Royal Economic Society, vol. 118(531), pages 1245-1261, August.
    18. William Acar & Kizhekepat Sankaran, 1999. "The myth of the unique decomposability: specializing the Herfindahl and entropy measures?," Strategic Management Journal, Wiley Blackwell, vol. 20(10), pages 969-975, October.
    19. repec:bla:econom:v:43:y:1976:i:171:p:267-74 is not listed on IDEAS
    20. Berger, Allen N. & Demsetz, Rebecca S. & Strahan, Philip E., 1999. "The consolidation of the financial services industry: Causes, consequences, and implications for the future," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 135-194, February.
    21. Edward J. Kane, 2000. "Incentives for banking megamergers: what motives might regulators infer from event-study evidence?," Proceedings, Federal Reserve Bank of Cleveland, pages 671-705.
    22. Stiroh, Kevin J & Strahan, Philip E, 2003. "Competitive Dynamics of Deregulation: Evidence from U.S. Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(5), pages 801-828, October.
    23. Benjamin Klein, 2001. "The Microsoft Case: What Can a Dominant Firm Do to Defend Its Market Position?," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 45-62, Spring.
    24. Borenstein, Severin, 1990. "Airline Mergers, Airport Dominance, and Market Power," American Economic Review, American Economic Association, vol. 80(2), pages 400-404, May.
    25. Bikker, Jacob A. & Haaf, Katharina, 2002. "Competition, concentration and their relationship: An empirical analysis of the banking industry," Journal of Banking & Finance, Elsevier, vol. 26(11), pages 2191-2214, November.
    26. Jaap W. B. Bos & James W. Kolari, 2005. "Large Bank Efficiency in Europe and the United States: Are There Economic Motivations for Geographic Expansion in Financial Services?," The Journal of Business, University of Chicago Press, vol. 78(4), pages 1555-1592, July.
    27. Lawrence J. White, 2008. "The Growing Influence of Economics and Economists on Antitrust: An Extended Discussion," Working Papers 08-3, New York University, Leonard N. Stern School of Business, Department of Economics.
    28. Salop, Steven C & Scheffman, David T, 1983. "Raising Rivals' Costs," American Economic Review, American Economic Association, vol. 73(2), pages 267-271, May.
    29. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
    30. Lawrence J. Radecki, 1998. "The expanding geographic reach of retail banking markets," Economic Policy Review, Federal Reserve Bank of New York, vol. 4(Jun), pages 15-34.
    31. Cole, Rebel A. & Goldberg, Lawrence G. & White, Lawrence J., 2004. "Cookie Cutter vs. Character: The Micro Structure of Small Business Lending by Large and Small Banks," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 39(2), pages 227-251, June.
    32. Cowling, Keith, 1976. "On the theoretical specification of industrial structure-performance relationships," European Economic Review, Elsevier, vol. 8(1), pages 1-14, June.
    33. Hannan, Timothy H. & Prager, Robin A., 2004. "The competitive implications of multimarket bank branching," Journal of Banking & Finance, Elsevier, vol. 28(8), pages 1889-1914, August.
    34. Brambor, Thomas & Clark, William Roberts & Golder, Matt, 2006. "Understanding Interaction Models: Improving Empirical Analyses," Political Analysis, Cambridge University Press, vol. 14(1), pages 63-82, January.
    35. Allen N. Berger & Asli Demirgüč-Kunt & Joseph G. Haubrich & Ross Levine, 2004. "Introduction: Bank concentration and competition: an evolution in the making," Proceedings, Federal Reserve Bank of Cleveland, pages 433-451.
    36. Adelman, M A, 1969. "Comment on the "H" Concentration Measure as a Numbers-Equivalent," The Review of Economics and Statistics, MIT Press, vol. 51(1), pages 99-101, February.
    37. Berger, Allen N, et al, 2004. "Bank Concentration and Competition: An Evolution in the Making," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 433-451, June.
    38. Philippe Aghion & Christopher Harris & Peter Howitt & John Vickers, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(3), pages 467-492.
    39. Goldberg, Lawrence G. & Rai, Anoop, 1996. "The structure-performance relationship for European banking," Journal of Banking & Finance, Elsevier, vol. 20(4), pages 745-771, May.
    40. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
    41. Evans, William N & Kessides, Ioannis N, 1993. "Localized Market Power in the U.S. Airline Industry," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 66-75, February.
    42. A. P. Lerner, 1934. "The Concept of Monopoly and the Measurement of Monopoly Power," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 1(3), pages 157-175.
    43. Pedro Teles & Ruilin Zhou, 2005. "A stable money demand: Looking for the right monetary aggregate," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 29(Q I), pages 50-63.
    44. Kahai, Simran K & Kaserman, David L & Mayo, John W, 1996. "Is the "Dominant Firm" Dominant? An Empirical Analysis of AT&T's Market Power," Journal of Law and Economics, University of Chicago Press, vol. 39(2), pages 499-517, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Schneider, Andreas, 2020. "Credit cooperatives: Market structure, competition, and conduct. Exploring the case of Paraguay," MPRA Paper 102309, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bos, J.W.B. & Chan, Y.L. & Kolari, J.W. & Yuan, J., 2010. "Competition and critical mass," Research Memorandum 063, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    2. Huang, Tai-Hsin & Hu, Chu-Nan & Chang, Bao-Guang, 2018. "Competition, efficiency, and innovation in Taiwan’s banking industry — An application of copula methods," The Quarterly Review of Economics and Finance, Elsevier, vol. 67(C), pages 362-375.
    3. Khan, Habib Hussain & Ahmad, Rubi Binti & Chan, Sok Gee, 2018. "Market structure, bank conduct and bank performance: Evidence from ASEAN," Journal of Policy Modeling, Elsevier, vol. 40(5), pages 934-958.
    4. Coccorese, Paolo & Pellecchia, Alfonso, 2013. "Multimarket contact, competition and pricing in banking," Journal of International Money and Finance, Elsevier, vol. 37(C), pages 187-214.
    5. Coccorese, Paolo, 2012. "Banks as ‘fat cats’: Branching and price decisions in a two-stage model of competition," Journal of Economics and Business, Elsevier, vol. 64(5), pages 338-363.
    6. Florian Leon, 2015. "What do we know about the role of bank competition in Africa?," CERDI Working papers halshs-01164864, HAL.
    7. Li, Shaofang & Marinč, Matej, 2016. "Competition in the clearing and settlement industry," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 40(C), pages 134-162.
    8. Bogdan Capraru & Nicoleta-Livia Pintilie, 2017. "Assessing competition in the European Union banking sector," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 9(1), pages 007-026, June.
    9. Barbara Casu & Claudia Girardone & Philip Molyneux, 2012. "Is There a Conflict between Competition and Financial Stability?," Chapters, in: James R. Barth & Chen Lin & Clas Wihlborg (ed.), Research Handbook on International Banking and Governance, chapter 3, Edward Elgar Publishing.
    10. Cruz-García, Paula & Fernández de Guevara, Juan & Maudos, Joaquín, 2021. "Bank competition and multimarket contact intensity," Journal of International Money and Finance, Elsevier, vol. 113(C).
    11. Habib Hussain Khan & Rubi Binit Ahmad & Chan Sok Gee, 2016. "Market Structure, Financial Dependence and Industrial Growth: Evidence from the Banking Industry in Emerging Asian Economies," PLOS ONE, Public Library of Science, vol. 11(8), pages 1-24, August.
    12. Michiel van Leuvensteijn & Jacob Bikker & Adrian van Rixtel & Christoffer Kok Sørensen, 2011. "A new approach to measuring competition in the loan markets of the euro area," Applied Economics, Taylor & Francis Journals, vol. 43(23), pages 3155-3167.
    13. Martin Goetz, 2011. "Bank Organization, Market Structure and Risk Taking: Theory and Evidence from U.S. Commercial Banks," NFI Working Papers 2011-WP-11, Indiana State University, Scott College of Business, Networks Financial Institute.
    14. Nguyen, My & Perera, Shrimal & Skully, Michael, 2016. "Bank market power, ownership, regional presence and revenue diversification: Evidence from Africa," Emerging Markets Review, Elsevier, vol. 27(C), pages 36-62.
    15. Muntazir HUSSAIN & Zaheer ABBAS & Usman BASHIR, 2014. "Competition and market contestability of banks: Evidence from emerging financial market," EuroEconomica, Danubius University of Galati, issue 1(33), pages 67-79, May.
    16. Manthos D. Delis & K. Christos Staikouras & Panagiotis T. Varlagas, 2008. "On the Measurement of Market Power in the Banking Industry," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(7‐8), pages 1023-1047, September.
    17. Michiel van Leuvensteijn & Jacob Bikker & Adrian van Rixtel & Christoffer Kok Sørensen, 2011. "A new approach to measuring competition in the loan markets of the euro area," Applied Economics, Taylor & Francis Journals, vol. 43(23), pages 3155-3167.
    18. Manthos D. Delis & K. Christos Staikouras & Panagiotis T. Varlagas, 2008. "On the Measurement of Market Power in the Banking Industry," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(7‐8), pages 1023-1047, September.
    19. Hong Liu & Phil Molyneux & John O.S. Wilson, 2013. "Competition in banking: measurement and interpretation," Chapters, in: Adrian R. Bell & Chris Brooks & Marcel Prokopczuk (ed.), Handbook of Research Methods and Applications in Empirical Finance, chapter 8, pages 197-215, Edward Elgar Publishing.
    20. Ugur, Mehmet & Trushin, Eshref & Solomon, Edna, 2016. "Inverted-U relationship between R&D intensity and survival: Evidence on scale and complementarity effects in UK data," Research Policy, Elsevier, vol. 45(7), pages 1474-1492.

    More about this item

    Keywords

    Ordered by external client;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:use:tkiwps:0933. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marina Muilwijk (email available below). General contact details of provider: https://edirc.repec.org/data/eiruunl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.