Competition in the Clearing and Settlement Industry

Abstract

This article empirically analyzes the competitive landscape within the clearing and settlement industry. Using the panel data of 46 clearing and settlement institutions from 23 countries we confirm that competition between clearing and settlement institutions is limited. We show that competition increases with the institutional size, with technological development and after horizontal mergers but not after vertical mergers. Additionally, we find that competition in clearing and settlement is higher in the U.S. than in Europe and higher during the global financial crisis compared to normal times.

Keywords: Clearing and Settlement Services; Competitive Condition; Panzar-Rosse Model; Global Financial Crisis

JEL Classification: G15, G21