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State-owned Banks as Competition Enhancers, or the Grand Illusion

Author

Listed:
  • Robert Bichsel

    (Swiss National Bank)

  • Christian Spielmann

    (Plaut Consulting)

Abstract

We analyze the role of state-ownership in the banking sector from the perspective of competition. Considering both the market for mortgage loans and the market for savings and investment deposits in Switzerland, we test three hypothesis: (i) Is the conduct followed by the state-owned 'cantonal banks' consistent with marginal cost pricing? (ii) Do cantonal banks charge and/or offer relatively customer friendly interest rates? And (iii) is competition intensified by the conduct and presence of cantonal banks. Based on a detailed database containing information at he individual bank level over the 1996-2002 period, the answer is: 'No'.

Suggested Citation

  • Robert Bichsel & Christian Spielmann, 2004. "State-owned Banks as Competition Enhancers, or the Grand Illusion," Industrial Organization 0407003, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpio:0407003
    Note: Type of Document - pdf; pages: 39
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    References listed on IDEAS

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    Cited by:

    1. Ho, Chun-Yu, 2012. "Market structure, welfare, and banking reform in China," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 291-313.
    2. repec:hum:wpaper:sfb649dp2008-010 is not listed on IDEAS
    3. Chen, Pei-Fen & Liu, Ping-Chin, 2013. "Bank ownership, performance, and the politics: Evidence from Taiwan," Economic Modelling, Elsevier, vol. 31(C), pages 578-585.
    4. Dong, Baomin & Guo, Guixia, 2013. "A model of China's export strengthening outward FDI," China Economic Review, Elsevier, vol. 27(C), pages 208-226.
    5. International Monetary Fund, 2007. "Switzerland: Financial Sector Assessment Program: Technical Note: The Swiss Banking System: Structure, Performance, and Medium-Term Challenges," IMF Staff Country Reports 2007/199, International Monetary Fund.
    6. repec:zbw:bofitp:2009_019 is not listed on IDEAS
    7. Astrid Matthey, 2010. "Do public banks have a competitive advantage?," The European Journal of Finance, Taylor & Francis Journals, vol. 16(1), pages 45-55.
    8. Dumitriu, Ramona & Stefanescu, Razvan & Nistor, Costel, 2012. "State - owned banks from Romania," MPRA Paper 52768, University Library of Munich, Germany, revised Jan 2013.
    9. Ho, Chun-Yu, 2012. "Market structure, welfare, and banking reform in China," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 291-313.
    10. Dummann, Kathrin, 2008. "Retirement saving and attitude towards financial intermediaries: Evidence for Germany," Thuenen-Series of Applied Economic Theory 99, University of Rostock, Institute of Economics.
    11. Doris Neuberger & Maurice Pedergnana & Solvig Räthke-Döppner, 2008. "Concentration of Banking Relationships in Switzerland: The Result of Firm Structure or Banking Market Structure?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 33(2), pages 101-126, April.

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    More about this item

    Keywords

    Competition; Banking; State-ownership; Switzerland; Cantonal banks;
    All these keywords.

    JEL classification:

    • L - Industrial Organization

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