Assessing Banking Competition: An Application to the Spanish Market for (Quality-Changing) Deposits
24 Pages Posted: 30 Aug 2006
Date Written: August 30, 2006
Taking the Spanish market for deposits as a case study we show the importance of properly controlling for the quality of the services provided when assessing the degree of banking competition. While a simple approach based on estimating the price elasticity of the residual supply of deposit funds faced by banks does not reveal any increase in competition, such an increase is clear when the interest rate on deposits is "corrected" according to the behaviour of variables that proxy the quality of the different services embedded in a bank deposit.
Keywords: Banking competition, panel data, service quality
JEL Classification: G21, D40
Suggested Citation: Suggested Citation
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