approach is able to measure competition of bank market segments, such as the loan market, whereas many well-known measures of … ignores differences in bank product quality and design, as well as the attractiveness of innovations. We measure competition …

stronger competition implies significantly lower spreads between bank and market interest rates for most loan market products … bank interest rates, we likewise find that banks tend to price their loans more in accordance with the market in countries … where competitive pressures are stronger. Further, where loan market competition is stronger, we observe larger bank spreads …