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Journal ArticleDOI

Market Share Inequality, the Number of Competitors, and the HHI: An Examination of Bank Pricing

Timothy H. Hannan
- 01 Feb 1997 - 
- Vol. 12, Iss: 1, pp 23-35
TLDR
In this paper, the Herfindahl-Hirschman index (HHI) was used to determine whether the role of market share inequality and the number of competitors in explaining bank deposit and loan rates.
Abstract
This paper seeks to determine whether the Herfindahl--Hirschman index (HHI) adequately accounts for the roles of market share inequality and the number of competitors in explaining bank deposit and loan rates. This is been done by estimating deposit-rate and loan-rate equations in which the HHI is decomposed into components that reflect share inequality and number of competitors and, alternatively, by adding measures of share inequality and the number of competitors as additional explanatory variables. Results are inconclusive in the case of deposit rates but suggest that the HHI does not give sufficient weight to the number of competitors in explaining loan rates.

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Citations
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The consolidation of the financial services industry: Causes, consequences, and implications for the future

TL;DR: In this article, a framework for evaluating the causes, consequences, and future implications of financial services industry consolidation is proposed, and a review of the extant research literature within the context of this framework is provided.
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The effects of government ownership on bank lending

TL;DR: In this paper, the authors used information on individual loan contracts to study the effects of government ownership on bank lending behavior, and found that state-owned banks charge lower interest rates than do privately owned banks to similar or identical firms, even if firms are able to borrow more from private owned banks.
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Distance, Lending Relationships and Competition

TL;DR: In this paper, the authors study the effect on loan conditions of geographical distance between firms, the lending bank, and all other banks in the vicinity, and report the first comprehensive evidence on the occurrence of spatial price discrimination in bank lending.
Book

Globalization of Financial Institutions: Evidence from Cross-Border Banking Performance

TL;DR: In this article, the causes, consequences, and implications of cross-border consolidation of financial institutions by reviewing several hundred studies, providing comparative international data, and estimating cross-bank efficiency in France, Germany, Spain, the U.K., and the United States during the 1990s.
Journal ArticleDOI

Bank market power and sme financing constraints

TL;DR: In this article, the Lerner index was used as an alternative to traditional measures of concentration in the industrial organization literature to measure market power in corporate lending relationships, and the results showed that the results are sensitive to the choice between IO margins and traditional concentration measures.
References
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Posted Content

The Herfindahl-Hirschman index

TL;DR: The Herfindahl-Hirschman index (HHI) as discussed by the authors is a statistical measure of concentration, and it has achieved an unusual degree of visibility for a statistical index because of its use by the Department of Justice and the Federal Reserve in the analysis of the competitive effects of mergers.
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Bank commercial loan markets and the role of market structure: evidence from surveys of commercial lending

TL;DR: In this article, the authors test two tenets that underlie the current practice of antitrust analysis in banking, namely the view that bank commercial loan markets are local in nature and the belief that banks in more concentrated markets are more likely to engage in some form of noncompetitive behavior.
Journal ArticleDOI

Market Share Inequality, the HHI, and Other Measures of the Firm-Composition of a Market

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Journal ArticleDOI

The Effect of Market Share Distribution on Industry Performance: Reply

TL;DR: In this article, the authors identify two fundamental and opposing forces within industries-the advantages of greater output control by leading firms, and the difficulty of agreement among more numerous firms, as well as demonstrate basic deficiencies of the conventional concentration ratio, complex roles for multiple shares in industry performance, and a greater overall importance for large-share firms than heretofore recognized.
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