Competition and Structure of the Mutual Fund Industry in Spain: The Role of Credit Institutions

39 Pages Posted: 10 Dec 2012 Last revised: 12 Dec 2012

See all articles by María Isabel Cambón

María Isabel Cambón

Comisión Nacional de Mercado de Valores

Ramiro Losada

Comision Nacional del Mercado de Valores

Multiple version iconThere are 2 versions of this paper

Date Written: November 10, 2012

Abstract

In industries where consumers prefer to make all their purchases from a single company (for example, a supermarket), companies tend to offer a greater variety of products. By using that strategy, they succeed in growing their market share in the industry and gaining market power. This behavior is also typical of the financial industry, where consumers usually prefer to concentrate all their financial operations in a single entity. In Spain, the big growth of mutual funds since 1995 and the model of universal banking, suggest the existence of these cross-effects on demand (spillovers). In this paper, we provide empirical evidence of the presence of these effects in the Spanish mutual fund market. Moreover these effects are stronger than in the US market. The intensity of the effects appears to be greater in the retail mutual fund segment than in the wholesale segment. This result would be consistent with the relative increase in the number of funds offered by fund managers, the higher fees charged, and the stronger degree of concentration of fund families found in the retail segment.

Keywords: competition, market power, variety

JEL Classification: G23, L11

Suggested Citation

Cambón, María Isabel and Losada, Ramiro, Competition and Structure of the Mutual Fund Industry in Spain: The Role of Credit Institutions (November 10, 2012). Available at SSRN: https://ssrn.com/abstract=2187193 or http://dx.doi.org/10.2139/ssrn.2187193

María Isabel Cambón

Comisión Nacional de Mercado de Valores ( email )

Edison 4
Madrid, 28006
Spain

Ramiro Losada (Contact Author)

Comision Nacional del Mercado de Valores ( email )

c/edison 4
Madrid, Madrid 28006
Spain

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