1,720,977 research outputs found
Competition in french and italian banking markets: a comparison
No full textThis paper addresses the empirical question of measuring competition in the banking sector. The question is relevant both from a positive and a normative perspective. Banking industries in Europe, specifically in France and Italy, are quickly changing their structure after deregulation, and it is interesting to find out which direction competition among banks has been following in the past few years. It is also interesting to be able to measure and forecast the change in degree of competition due to mergers among banks in an antitrust perspective.
The analysis is not however entirely data based. The quantitative results are derived from a well founded theoretical model that allows to infer information about benefits and costs by bank and by market from banks’ entry and branching decisions. The estimated benefits and costs are then used to compute measures of degree of competition.
It results that the structures of the French and Italian banking industries differ, with a strong evidence that the Italian banking sector is still far from an equilibrium state, mostly because economies of scale in branching have still to be exploited and local market power niches are still allowed to exist. Both measures of competitive behaviour presented in the paper indicate, on average, tougher competition in France than in Italy.
There is also some evidence that mergers do not induce lesser competition. Rather the opposite, in some cases
New technologies and bank organization. Discussion.
No full textDiscussion of the papers "Information technology and banking organization" by Mocetti, Pagnini, Sette and "Bank acquisition and decentralization choices" by Beretta and Del Prete. Both papers deal with decentralization of loan decisions from headquartes to local bank branches. They argue that Italian banks have increased decentralization in order to be closer to local Small and Medium Businesses. The discussion points out that large banks has not entirely achieved this goal, but they have increased their shares in the loans market to big and medium sized firms, and left smaller firms to smaller local banks
A MULTIPERIOD MODEL OF COMPETITION IN RETAIL BANKING
No full textThis paper presents a two-period model of branching behaviour and competition in retail banking. It extends a static model, from which it borrows most of its theoretical underpinnings, by adding information on banks branching strategies under the (realistic) assumption that it takes time and strategic adjustments for a bank to reach its optimal branching network size.
The estimated model yields measures of competition and measures of benefits and costs by bank and by market and their evolution in time. It results that between 2004 and 2006 in local Italian retail banking, competition and banks’ efficiency increased. There is evidence of crosstime subsidisations: banks may operate at suboptimal branching sizes, with benefits lower than costs, at some point in time, to reach “optimality” in the future
Più concorrenza oggi, maggiore concentrazione domani? Un’applicazione all’industria bancaria Europea
No full textL'articolo presenta un modello teorico e una metodologia di verifica empirica degli effetti della deregolamentazione sulla struttura di settori industriali. In particolare l'evidenza teorica ed empirica supportano l'affermazione che la deregolamentazione dell'industria Bancaria in Europa ha portato ad un aumento della concentrazione nel settore in tutti i paesi Europei
Impact of Mergers on the Degree of Competition: Application to the Banking Industry
No full textThis paper analyses the relation between competition and concentration in a monopolistic competition model where banks compete in branching and interest rates and market structure is endogenous. The model is applied on individual bank data in Italy and France using a maximum likelihood approach to derive a measure of the degree of competition in each local market. We propose an empirical test to evaluate ex-ante the impact of horizontal mergers on this measure. Depending on the pre-merger market structure and geographic distribution of branches, we find either cases where the merger is pro-competitive or anti-competitive. It proves its relevance as a tool for competition policy analysis. In addition, thanks to its theoretical foundation, it encompasses more information than traditional measures of competition while it is parsimonious in terms of data requirements
Branching and competition in the European Banking Industry
No full textBranching and competition in European Banking Industries, through the specification and estimation of a model based on a model of monopolistic competition.
The estimated model captures the changes over time of competition , revenues and costs of branching in several Euriopean countries. The study shows a persistence of segmentation across EEC Banking industries
Features and determinants of risk in investment choices by private equity funds
No full textIn this paper we propose a measure of riskiness of PE assets alternative to the CAPM derived beta coefficient usually suggested in the literature on performance of PE Funds. We assume that at any given point in time there exist alternative investment opportunities that can be classified into a limited number of types, and that Funds manage their Portfolio “optimally”, within the range of investments allowed by their Placement Memorandum. We first estimate a discrete choice model of the Fund Managers’ investment decisions by type of PE investment, as a function of the observed characteristics of the Fund, of the Deal and of the Portfolio Company, as well as of the year when the deal is closed. Given the chosen type of investment, we then estimate the probability of negative returns of each deal in each investment class. These predicted probabilities together with the historical expected shortfalls by investment type, yield the Expected Loss by deal, the measure of pure risk we propose in this paper. We find that it is possible to identify the idiosyncratic features of each investment type and that the patterns and degrees of riskiness differ quite significantly among them
The impact of mergers on the degree of competition in the banking industry
Full text linkThis paper analyses the relation between competition and concentration in the banking sector. The empirical answer is given by testing a monopolistic competition model of bank branching behaviour on individual bank data at county level (départements and provinces) in France and Italy. We propose a measure of the degree of competiveness in each local market that is function also of market structure indicators. We then use the econometric model to evaluate the impact of horizontal mergers among incumbent banks on competition and discuss when, depending on the pre-merger structure of the market and geographic distribution of branches, the merger is anti-competitive. The paper has implications for competition policy as it suggests an applied tool to evaluate the potential anti-competitive impact of mergers
A test of the impact of mergers on bank competition
Full text linkWe propose a new test to evaluate the impact of horizontal mergers on competition in the banking industry. The test is designed to be applied ex ante to potential mergers while being parsimonious in terms of data, as it only uses
information on branches in local markets. The test is a counterfactual exercise based on a two-stage model where banks compete in branching and interest rates and requires comparing the estimated degree of competition in the status quo, where branching networks by banks are those actually observed, with a counterfactual scenario, where the branching network of the new entity is the sum of the branches of the banks involved in the horizontal merger. The statistical difference between the two estimated measures of competition quantifies the impact of the merger.We apply our test to French and Italian mergers
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