The structure of retail markets: what do we learn from bank-specific rates?
Shelagh Heffernan1; Xiaoqing Fu2
Source PublicationApplied Financial Economics
ABS Journal Level2
ISSN0960–3107 1466-4305

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.

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Document TypeJournal article
Corresponding AuthorShelagh Heffernan
Affiliation1.Faculty of Finance, Cass Business School, City University, 106 Bunhill Row, London EC1Y 8TZ, UK
2.Faculty of Business Administration, University of Macau, Macau, China
Recommended Citation
GB/T 7714
Shelagh Heffernan,Xiaoqing Fu. The structure of retail markets: what do we learn from bank-specific rates?[J]. Applied Financial Economics,2009,19(23):1885-1898.
APA Shelagh Heffernan,&Xiaoqing Fu.(2009).The structure of retail markets: what do we learn from bank-specific rates?.Applied Financial Economics,19(23),1885-1898.
MLA Shelagh Heffernan,et al."The structure of retail markets: what do we learn from bank-specific rates?".Applied Financial Economics 19.23(2009):1885-1898.
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