This paper analyses the extent to which the level of bank competition influences monetary policy transmission. Using a large panel dataset of 978 banks from 55 countries, and employing the Lerner index model as a measure of market structure, our results show that an increase in banking sector...

A tension exists in the current literature as to whether or not competition contributes to banking stability. On the one side, proponents of the so called lsquo;franchise value hypothesis' argue that banks with greater market power are able to protect their franchise value because they are not...