Market Structure and Competition Among Retail Depository Institutions

33 Pages Posted: 6 Mar 2004

See all articles by Andrew Milman Cohen

Andrew Milman Cohen

Board of Governors of the Federal Reserve - Division of International Finance (IFDP)

Michael J. Mazzeo

Northwestern University - Kellogg School of Management

Date Written: January 2004

Abstract

We assess the competitive impact that single-market banks and thrift institutions have on multi-market banks (and vice-versa) in 1,884 non-MSA markets. We estimate a model of equilibrium market structure which endogenizes entry for three types: multi-market banks, single-market banks, and thrift institutions. Observed market structures and the solution to an entry-type game identify the parameters of a latent (unobserved) profit function. We find significant evidence of product differentiation - particularly in the case of thrifts. Furthermore, product differentiation appears to depend upon differences in market geography.

Keywords: Market structure, entry, bank, thrift

JEL Classification: L11, L13, G21, G28

Suggested Citation

Cohen, Andrew Milman and Mazzeo, Michael J., Market Structure and Competition Among Retail Depository Institutions (January 2004). FEDS Working Paper No. 2004-04. Available at SSRN: https://ssrn.com/abstract=513002 or http://dx.doi.org/10.2139/ssrn.513002

Andrew Milman Cohen (Contact Author)

Board of Governors of the Federal Reserve - Division of International Finance (IFDP) ( email )

20th St. and Constitution Ave.
Washington, DC 20551
United States

Michael J. Mazzeo

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847-467-7551 (Phone)

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