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The joint estimation of bank-level market power and efficiency

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The joint estimation of bank-level market power and efficiency. / Delis, Manthos D.; Tsionas, Michael.
In: Journal of Banking and Finance, Vol. 33, No. 10, 10.2009, p. 1842-1850.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Delis, MD & Tsionas, M 2009, 'The joint estimation of bank-level market power and efficiency', Journal of Banking and Finance, vol. 33, no. 10, pp. 1842-1850. https://doi.org/10.1016/j.jbankfin.2009.04.006

APA

Delis, M. D., & Tsionas, M. (2009). The joint estimation of bank-level market power and efficiency. Journal of Banking and Finance, 33(10), 1842-1850. https://doi.org/10.1016/j.jbankfin.2009.04.006

Vancouver

Delis MD, Tsionas M. The joint estimation of bank-level market power and efficiency. Journal of Banking and Finance. 2009 Oct;33(10):1842-1850. doi: 10.1016/j.jbankfin.2009.04.006

Author

Delis, Manthos D. ; Tsionas, Michael. / The joint estimation of bank-level market power and efficiency. In: Journal of Banking and Finance. 2009 ; Vol. 33, No. 10. pp. 1842-1850.

Bibtex

@article{0daeae44de054702b32d97e1328da355,
title = "The joint estimation of bank-level market power and efficiency",
abstract = "The aim of this study is to provide a methodology for the joint estimation of efficiency and market power of individual banks. The proposed method utilizes the separate implications of the new empirical industrial organization and the stochastic frontier literatures and suggests identification using the local maximum likelihood (LML) technique. Through LML, estimation of market power of individual banks becomes feasible, while a number of restrictive theoretical and empirical assumptions are relaxed. The empirical analysis is carried out on the basis of EMU bank data. Market power estimates indicate fairly competitive conduct in general; however, heterogeneity in market power estimates is substantial across banks. The latter result suggests that the practice of some banks deviates from the average fairly competitive behavior, a finding that has important policy implications. Finally, efficiency and market power present a negative relationship, which is in line with the so-called “quiet life hypothesis”.",
keywords = "Efficiency, Market power, Local maximum likelihood",
author = "Delis, {Manthos D.} and Michael Tsionas",
year = "2009",
month = oct,
doi = "10.1016/j.jbankfin.2009.04.006",
language = "English",
volume = "33",
pages = "1842--1850",
journal = "Journal of Banking and Finance",
issn = "0378-4266",
publisher = "Elsevier",
number = "10",

}

RIS

TY - JOUR

T1 - The joint estimation of bank-level market power and efficiency

AU - Delis, Manthos D.

AU - Tsionas, Michael

PY - 2009/10

Y1 - 2009/10

N2 - The aim of this study is to provide a methodology for the joint estimation of efficiency and market power of individual banks. The proposed method utilizes the separate implications of the new empirical industrial organization and the stochastic frontier literatures and suggests identification using the local maximum likelihood (LML) technique. Through LML, estimation of market power of individual banks becomes feasible, while a number of restrictive theoretical and empirical assumptions are relaxed. The empirical analysis is carried out on the basis of EMU bank data. Market power estimates indicate fairly competitive conduct in general; however, heterogeneity in market power estimates is substantial across banks. The latter result suggests that the practice of some banks deviates from the average fairly competitive behavior, a finding that has important policy implications. Finally, efficiency and market power present a negative relationship, which is in line with the so-called “quiet life hypothesis”.

AB - The aim of this study is to provide a methodology for the joint estimation of efficiency and market power of individual banks. The proposed method utilizes the separate implications of the new empirical industrial organization and the stochastic frontier literatures and suggests identification using the local maximum likelihood (LML) technique. Through LML, estimation of market power of individual banks becomes feasible, while a number of restrictive theoretical and empirical assumptions are relaxed. The empirical analysis is carried out on the basis of EMU bank data. Market power estimates indicate fairly competitive conduct in general; however, heterogeneity in market power estimates is substantial across banks. The latter result suggests that the practice of some banks deviates from the average fairly competitive behavior, a finding that has important policy implications. Finally, efficiency and market power present a negative relationship, which is in line with the so-called “quiet life hypothesis”.

KW - Efficiency

KW - Market power

KW - Local maximum likelihood

U2 - 10.1016/j.jbankfin.2009.04.006

DO - 10.1016/j.jbankfin.2009.04.006

M3 - Journal article

VL - 33

SP - 1842

EP - 1850

JO - Journal of Banking and Finance

JF - Journal of Banking and Finance

SN - 0378-4266

IS - 10

ER -