Handbooks of Research Methods and Applications series
Edited by Adrian R. Bell, Chris Brooks and Marcel Prokopczuk
Chapter 8: Competition in banking: measurement and interpretation
Competition in banking is important because it encourages efficiency in the production and allocation of financial services. In banking, the level of competition has implications for access to finance, the allocation of capital funds, the competitiveness and development of manufacturing and service sectors, the level of economic growth and the extent of financial stability (Petersen and Rajan, 1995; Cetorelli, 2004; Bonaccorsi Di Patta and Dell’Aricca, 2004; Beck et al., 2004). Competition can make markets more competitive by encouraging innovation, lower prices and higher-quality products to enhance consumer choice and welfare. Given the importance of bank competition, it is crucial that researchers find precise ways of assessing not only the level of competition at a given moment in time, but also changes in competition over a sustained period. The more accurate the measure, the more precise any predictions of econometric models utilized are likely to be. Any policy measures following from such predictions can be misleading if the extent of competition measured is inaccurate.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.