Ultimate ownership and bank competition

By Jose Azar, Sahil Raina, Martin C. Schmalz. Financial Management, 2016

216 citations recorded by the source corpus.

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.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/37aedaa1b64fffc9c96f3ab91c118c084c736f01

How researchers see this paper

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In Accounting

1. Michelle René Lowry
2. Katharina Lewellen
3. Simcha Barkai
4. Michael Sinkinson
5. Christopher T. Conlon
6. Matt Backus
7. Jay R. Ritter
8. K. Hanley

In Finance

1. Katharina Lewellen
2. Simcha Barkai
3. Michelle René Lowry
4. Jay R. Ritter
5. Thomas J. Chemmanur
6. Jie He
7. Xiaoyun Yu
8. Ľuboš Pástor

Citations in the corpus

• Overlapping Ownership, R&D Spillovers, and Antitrust Policy (2019, unknown): “Similar results are obtained for the banking industry (Azar et al. 2016).”
• Common Ownership in America: 1980–2017 (2019, background): “, Azar et al. (2018) do when they compute the profit weights for airlines.”
• Declining Labor and Capital Shares (2020, background): “Azar, Raina, and Schmalz (2016) show that the increase in the concentration of bank ownership has led to higher fees, higher thresholds, and lower returns on savings.”
• Does common ownership really increase firm coordination? (2020, background): “Two initial studies examine the effects of common ownership on prices of airline tickets (Azar et al. (2018)) and banking products (Azar et al.”
• Common ownership and competition in product markets (2021, unknown): “Azar et al. (2016, 2018) each analyzes a single, highly-regulated industry, and it is not clear whether these results are generalizable.”