Decentralized Market Power in Credit Markets

Decentralized Market Power in Credit Markets

By:	Silva, Thiago; Souza, Sérgio; Guerra, Solange; Tabak, Benjamin
Abstract:	The literature measures a bank's market power using aggregated data at the bank level. However, market power may be exercised in a decentralized way by each bank branch and for specific banking products. This article proposes a novel methodology for estimating a bank's market power at the branch level in each locality and for each banking product. We find significant heterogeneity in banks' market power by locality and product, even within the same bank. Our results suggest that aggregate measures of bank market power may be misleading and distorted. Accurate quantification of market power requires fine-grained measures, which are essential for enhancing financial regulation and competition.
URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:114766&r=