Market Structure and Competition Among Retail Depository Institutions
33 Pages Posted: 6 Mar 2004
Date Written: January 2004
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: Suggested Citation