A Revenue-Based Frontier Measure of Banking Competition

32 Pages Posted: 25 Mar 2010

See all articles by Santiago Carbo

Santiago Carbo

University of Granada - Faculty of Economics and Business Administration

David B. Humphrey

Florida State University - Department of Finance

Francisco Rodriguez-Fernandez

University of Granada - Department of Economic Theory and History

Date Written: December 23, 2009

Abstract

Measuring banking competition using the HHI, Lerner index, or H-statistic can give conflicting results. Borrowing from frontier analysis, the authors provide an alternative approach and apply it to Spain over 1992-2005. Controlling for differences in asset composition, productivity, scale economies, risk, and business cycle influences, they find no differences in competition between commercial and savings banks nor between large and small institutions, but the authors conclude that competition weakened after 2000. This appears related to strong loan demand where real loan-deposit rate spreads rose and fees were stable for activities where scale economies should have been realized.

Suggested Citation

Carbo, Santiago and Humphrey, David B. and Rodriguez-Fernandez, Francisco, A Revenue-Based Frontier Measure of Banking Competition (December 23, 2009). FRB of Philadelphia Working Paper No. 10-9. Available at SSRN: https://ssrn.com/abstract=1577884 or http://dx.doi.org/10.2139/ssrn.1577884

Santiago Carbo (Contact Author)

University of Granada - Faculty of Economics and Business Administration ( email )

Granada, E-18071
Spain

David B. Humphrey

Florida State University - Department of Finance ( email )

Tallahassee, FL 32306-1042
United States
850-644-7899 (Phone)
850-668-6696 (Fax)

Francisco Rodriguez-Fernandez

University of Granada - Department of Economic Theory and History ( email )

Granada
Spain

Register to save articles to
your library

Register

Paper statistics

Downloads
55
Abstract Views
408
rank
370,031
PlumX Metrics