Competition in banking: A disequilibrium approach
The Rosse-Panzar revenue test for competitive conditions in banking is based on observation of the impact on bank revenue of variation in factor input prices. We identify the implications for the H-statistic of misspecification bias in the revenue equation, arising when adjustment towards market equilibrium is partial and not instantaneous. In simulations, fixed effects estimation produces a measured H-statistic that is severely biased towards zero. Empirical results for the banking sectors of the Group of Seven (G7) countries corroborate our principal finding, that a dynamic formulation of the revenue equation is required for accurate identification of the H-statistic.
Year of publication: |
2009
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Authors: | Goddard, John ; Wilson, John O.S. |
Published in: |
Journal of Banking & Finance. - Elsevier, ISSN 0378-4266. - Vol. 33.2009, 12, p. 2282-2292
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Publisher: |
Elsevier |
Keywords: | Banking Competition Revenue test Dynamic panel estimation |
Saved in:
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