Assessing Bank Competition for Consumer Loans

39 Pages Posted: 23 Jan 2015 Last revised: 27 Jan 2015

See all articles by Wilko Bolt

Wilko Bolt

De Nederlandsche Bank (Dutch Central Bank); VU University Amsterdam

David B. Humphrey

Florida State University - Department of Finance

Date Written: January 22, 2015

Abstract

We assess the competitiveness of the $400 billion dollar U.S. bank consumer loan market by comparing results from different competition measures-HHI, Lerner Index, H-Statistic along with three others, two of which are related to frontier analysis. These measures are typically weakly related to one another and only half of them identify banks with the highest loan price and spread as also being the least competitive. This is the opposite of what would be expected. The states where the most and least competitive banks are located are noted. The most populous states with the largest banks are underrepresented.

Keywords: consumer loans, bank competition, frontier analysis

JEL Classification: G21, L80, L00

Suggested Citation

Bolt, Wilko and Humphrey, David B., Assessing Bank Competition for Consumer Loans (January 22, 2015). De Nederlandsche Bank Working Paper No. 457. Available at SSRN: https://ssrn.com/abstract=2553802 or http://dx.doi.org/10.2139/ssrn.2553802

Wilko Bolt

De Nederlandsche Bank (Dutch Central Bank) ( email )

P.O. Box 98
1000 AB Amsterdam
Netherlands

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

David B. Humphrey (Contact Author)

Florida State University - Department of Finance ( email )

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

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