Competition in the Clearing and Settlement Industry

Abstract

This article empirically analyzes the competitive landscape within the clearing and settlement industry. Using panel data for forty-six clearing and settlement institutions from twenty-three countries, we confirm that competition between clearing and settlement institutions is limited. We show that competition increases with institutional size, with technological development, and after horizontal mergers, but not after vertical mergers. In addition, we find that competition in clearing and settlement is higher in the US than in Europe and was 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: G20, G29, G15, D40