Friday, October 5, 2012: 9:20 AM
The three main measures of competition (HHI, Lerner Index, and H-Statistic)
are uncorrelated for U.S. banks. Thus inferences regarding competition are
measure-speci.c. We investigate why this occurs, propose a frontier measure of
relative competition, and apply it to .ve major bank service lines incorporating
data on payment activities only available since 2008. This recognizes that fee-
based banking services are now an important source of revenues so that assessing
competition by service line is preferred to a single measure for the whole bank.
are uncorrelated for U.S. banks. Thus inferences regarding competition are
measure-speci.c. We investigate why this occurs, propose a frontier measure of
relative competition, and apply it to .ve major bank service lines incorporating
data on payment activities only available since 2008. This recognizes that fee-
based banking services are now an important source of revenues so that assessing
competition by service line is preferred to a single measure for the whole bank.