Abstract

http://ssrn.com/abstract=2710252
 


 



Ultimate Ownership and Bank Competition


José Azar


University of Navarra, IESE Business School

Sahil Raina


University of Michigan, Ross School of Business

Martin C. Schmalz


University of Michigan, Stephen M. Ross School of Business

July 23, 2016


Abstract:     
We use a uniquely extensive branch-level dataset on deposit account interest rates, maintenance fees, and fee thresholds, and document substantial time-series and cross-sectional variation in these prices. We then examine whether variation in bank concentration helps explain the variation in prices. The standard measure of concentration, the HHI, is not correlated with any of the outcome variables. We then construct a generalized HHI (GHHI) that captures both common ownership (the degree to which banks are commonly owned by the same investors) and cross-ownership (the extent to which banks own shares in each other). The GHHI is strongly correlated with all prices. We use the growth of index funds as an arguably exogenous source of cross-sectional variation of county-level common ownership growth to suggest a causal link from the GHHI to higher prices for banking products.

Number of Pages in PDF File: 85

Keywords: Competition, Ownership, Diversification, Pricing, Antitrust, Governance, Product Market, Bank Competition

JEL Classification: L41, L10, G34


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Date posted: January 3, 2016 ; Last revised: July 24, 2016

Suggested Citation

Azar, José and Raina, Sahil and Schmalz, Martin C., Ultimate Ownership and Bank Competition (July 23, 2016). Available at SSRN: http://ssrn.com/abstract=2710252 or http://dx.doi.org/10.2139/ssrn.2710252

Contact Information

José Azar (Contact Author)
University of Navarra, IESE Business School ( email )
Avenida Pearson 21
Barcelona, 08034
Spain
Sahil Raina
University of Michigan, Ross School of Business ( email )
701 Tappan Street
Ann Arbor, MI 48109-1234
United States
Martin C. Schmalz
University of Michigan, Stephen M. Ross School of Business ( email )
701 Tappan St
R5456
Ann Arbor, MI 48109-1234
United States
7347630304 (Phone)
HOME PAGE: http://https://sites.google.com/site/martincschmalz/
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