Acceso usuarios
Shelagh Heffernan, Xiaoqing (Maggie) Fu
This article investigates the relationship between market structure and performance in the British retail banking market for the period 1993 to 2004. Using panel data estimation methods, both the Market Power (MP) and Efficient-Structure (ES) hypotheses are tested. This study is the first to employ bank-specific national 'prices' for a wide range of deposit and credit products, and for the UK, to include estimations of X-efficiency and scale efficiency. The estimations employ two alternative measures of concentration and are extended to test for the influence of the macro-economy, a money market rate and other control variables. It is also possible to test the 'quiet life' hypothesis. Like the numerous studies employing US data, we find that bank behaviour is best described by one of the two MP hypotheses though there is less evidence that they enjoy a 'quiet life'. The key policy lesson is that the competition authorities should direct their resources to monitor certain sub-markets in retail banking, rather than the sector as a whole.
