Market Structure and Competition among Retail Depository Institutions

By A. Cohen, Michael J. Mazzeo. Review of Economics and Statistics, 2003

138 citations recorded by the source corpus.

We assess competition among retail depository institutions in 1,884 rural markets. We estimate an equilibrium market structure model that endogenizes the operating decisions of three types of depository institutions: multimarket banks, single-market banks, and thrift institutions. Observed market structures and a game-theoretic specification of entry behavior identify the parameters of an underlying profit function. We find strong evidence that product differentiation generates additional profits for retail depository institutions. These profits help to maintain smaller banks and thrifts, even as larger banks expand their operations. Consumers have more options, as more institutions can profitably operate as a result of product differentiation.

Subfields: Economics and Econometrics, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/588963c3d2431b9d25be16acc000f76582d0f0dc

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. Steven R. G. Ongena
2. Katherine Ho
3. Hans Degryse
4. Joy L. Ishii
5. Enrico Sette
6. L. Gambacorta

In Finance

1. Hans Degryse
2. Steven R. G. Ongena
3. Katherine Ho
4. Joy L. Ishii
5. Allen N. Berger
6. Gregory F. Udell
7. A. Zazzaro
8. Vasso Ioannidou

In Strategy and Management

1. Katherine Ho
2. Steven R. G. Ongena
3. Hans Degryse
4. Joy L. Ishii

Citations in the corpus

• Competition and regulation in the banking sector: A review of the empirical evidence on the sources of bank rents (2007, background): “Cohen and Mazzeo (2003) bring this structural methodology to banking data.”
• Location and competition in retail banking (2011, background): “Cohen and Mazzeo (2007) further explore competition between bank types using a model of equilibrium market structure based on a crosssection of data.”
• Competition, Efficiency, and Soundness in Banking: An Industrial Organization Perspective (2010, unknown): “The intuition is that retail banking markets are local in nature because customers obtain banking services from nearby providers (Cohen and Mazzeo, 2007).”