Ultimate Ownership and Bank Competition

Citation data:

SSRN Electronic Journal

Publication Year:
2016
Usage 19163
Abstract Views 15652
Downloads 3511
Captures 82
Readers 79
Exports-Saves 3
Mentions 18
News Mentions 10
Blog Mentions 6
Economics Blog Mentions 2
Social Media 50
Tweets 49
Shares, Likes & Comments 1
Ratings
SSRN
SSRN Id:
2710252
DOI:
10.2139/ssrn.2710252
Author(s):
Azar, José ; Raina, Sahil ; Schmalz, Martin C.
Publisher(s):
Elsevier BV
Tags:
Competition; Ownership; Diversification; Pricing; Antitrust; Governance; Product Market; Bank Competition
Most Recent Tweet View All Tweets
Most Recent Blog Mention
Most Recent Economics Blog Mention
Most Recent News Mention
article description
We use a uniquely extensive branch-level dataset on deposit account interest rates, maintenance fees, and fee thresholds, and document substantial time-series and cross-sectional variation in these prices. We then examine whether variation in bank concentration helps explain the variation in prices. The standard measure of concentration, the HHI, is not correlated with any of the outcome variables. We then construct a generalized HHI (GHHI) that captures both common ownership (the degree to which banks are commonly owned by the same investors) and cross-ownership (the extent to which banks own shares in each other). The GHHI is strongly correlated with all prices. We use the growth of index funds as an arguably exogenous source of cross-sectional variation of county-level common ownership growth to suggest a causal link from the GHHI to higher prices for banking products.