Search results for "market power"
showing 10 items of 38 documents
Stackelberg Equilibrium with Many Leaders and Followers. The Case of Setup Costs
2016
I provide conditions that guarantee that a Stackelberg game with a setup cost and an integer number of leaders and followers has an equilibrium in pure strategies. The main feature of the game is that when the marginal follower leaves the market the price jumps up, so that a leader’s payoff is neither continuous nor quasiconcave. To show existence I check that a leader’s value function satisfies the following single crossing condition: When the other leaders produce more the leader never accommodates entry of more followers. If demand is strictly logconcave, and if marginal costs are both non decreasing and not flatter than average costs, then a Stackelberg equilibrium exists. Besides showi…
Revamping Research on Unrelated Diversification Strategy: Perspectives, Opportunities and Challenges for Future Inquiry
2015
With the aim of achieving an advanced understanding of current research on unrelated diversification and providing fruitful groundwork to foster active interchange between disciplinary traditions, this paper detects articles from two relevant research streams; i.e., strategic management and financial economics. We first provide a brief overview of management thinking on unrelated diversification strategy. Then, we present a conceptual map that offers a comprehensive appreciation of unrelated diversification strategy antecedents (i.e., environmental and institutional, organizational value-enhancing, and managerial drivers), implementation process (i.e., managerial complexity, misallocation o…
Efficiency, costs and market power analysis of the Spanish Port System
2021
El presente trabajo tiene diferentes objetivos. El primero es calcular la eficiencia técnica de las autoridades portuarias en la prestación de servicios sobre tráfico de mercancías y pasajeros en el periodo 2002- 2018. Para llevar a cabo este objetivo, se utiliza una función distancia orientada al output y se estima la eficiencia técnica a partir de una función frontera del tipo estocástico (SFA). Del mismo modo, se emplea la metodología no paramétrica (DEA) bajo dos supuestos alternativos, o bien bajo rendimientos constantes a escala (modelo de Charnes, Cooper y Rhodes, 1978), o bien bajo rendimientos variables a escala (modelo de Banker, Charnes y Cooper, 1984). Este análisis nos permite …
Factors explaining the interest margin in the banking sectors of the European Union
2003
Abstract This study analyses the interest margin in the principal European banking sectors (Germany, France, the United Kingdom, Italy and Spain) in the period 1993–2000 using a panel of 15,888 observations, identifying the fundamental elements affecting this margin. Our starting point is the methodology developed in the original study by Ho and Saunders [Journal of Financial and Quantitative Analysis XVI (1981) 581–600] and later extensions, but widened to take banks' operating costs explicitly into account. Also, unlike the usual practice in the literature, a direct measure of the degree of competition (Lerner index) in the different markets is used. The results show that the fall of marg…
Economic value, competition and financial distress in the european banking system
2012
Abstract In this paper we examine the impact of a large number of factors at the bank level (liquidity and credit risks, asset size, income diversification and market power), at the industry level (banking concentration) and macro-level (real GDP growth) on bank financial distress using an unbalanced panel of 308 European commercial banks between 1996 and 2009. The observations falling below a given threshold of the empirical distribution of the Shareholder Value Ratio proxy bank financial distress. We employ a panel probit regression and, given the presence of overlapping data giving rise to residual autocorrelation, we use the Bertschek and Lechner (1998) robust estimator of the covarianc…
Income structure, profitability and risk in the European banking sector: The impact of the crisis
2017
This study sets out to analyse whether the effect of the income structure on the risk and profitability of European banks has changed as a result of the crisis and if it varies according to banks’ specialisation in a particular type of banking business. To do so, it estimates the income structure over the period 2002–2012 using data for a panel of European banks. The study also examines if there are differences between investment-oriented banks and banks specialising in financial intermediation in terms of the effect of income structure on risk and profitability. Our findings show that an increase in the share of non-interest income has a negative impact on profitability, although the effec…
Does competition enhance the double-bottom-line performance of microfinance institutions?
2020
Abstract This paper investigates how competition affects the double-bottom-line performance of microfinance institutions (MFIs). While classical economic theory highlights that competition enhances efficiency and benefits both customers and firms, we argue that this is unlikely to apply to institutions operating in socially oriented industries, such as microfinance. Using a cross-country dataset of 4576 MFI-year observations (1139 unique MFIs) operating in 59 countries over a 10-year period (2005-2014), we find that competition has an adverse effect on MFIs’ economic sustainability and that competition undermines their breadth of outreach but enhances their depth of outreach. These results …
Bank competition and multimarket contact intensity
2021
Abstract This paper analyzes the effect of multimarket contact on bank competition. We propose a completely new multimarket contact indicator that not only considers the existence of contacts between banks, but also their intensity, by analyzing the strength–weakness position of banks in terms of branch numbers in comparison to their rivals in the markets where they coincide. We test the new indicator empirically in the context of the Spanish banking sector. The main results suggest a negative relationship between market power and the number of multimarket contacts, rejecting the hypothesis of tacit collusion in the Spanish banking sector. However, the result changes completely when we cons…
Regional financial development and bank competition: effects on firms' growth
2009
Fernandez de Guevara J. and Maudos J. Regional financial development and bank competition: effects on firms' growth, Regional Studies. This paper analyses the effect of regional financial development and bank competition on firms' growth using the Spanish provinces as a testing ground. The results show that firms in industries with a greater dependence on external finance grow faster in more financially developed provinces. The results also show that bank monopoly power has an inverted-‘U’ effect on firms' growth, suggesting that market power has its highest effect at intermediate values. The effect is heterogeneous among firms according to the financial dependence of the industry to which …
Monitoring and Market Power in Loan Markets
2000
Whether or not banks are engaged in ex ante monitoring of customers may have important consequences for the whole economy. We approach this question via a model in which banks can invest in either information acquisition or market power (product differentiation). The two alternatives generate different predictions, which are tested using panel data on Finnish local banks. We find evidence that banks’ investments in branch networks and human capital (personnel) contribute to information acquisition but not to market power. We also find that managing customers’ money transactions enhances banks ability to control their lending risks.