Competition in the cbkp_redit market among dominant banks in Mexico

Abstract:

MENDEZ-HERAS, Lizethe Berenice; VENEGAS-MARTINEZ, Francisco y LINTHON-DELGADO, Diego Emilio. Competition in the cbkp_redit market among dominant banks in Mexico. Rev. mex. econ. finanz [online]. 2021, vol. 16, n. spe, e699. Epub 05-Sep-2022. ISSN 2448-6795. https://doi. org/10.21919/remef. v16i0. 699. Objective: This research measures the degree of competition of the banks that dominate the cbkp_redit market in Mexico in 2004-2016. To do that, the non-structural approach of competition measures based on the theory of the New Empirical Industrial Organization (NEIO) is used. Methodology: A model of simultaneous equations with Generalized Least Squares in 2 Stages (GLS2E) is estimated in panel data to obtain the conjectural variation statistic, which measures the degree of coordination among the banks. Results: The empirical evidence obtained suggests that the dominant banks have a Cournot oligopolistic behavior in 2004-2016. Implications: Contrary to what was expected, the research also suggests that the increase in bank fees has had a positive effect on the demand for cbkp_redit. Originality: As far as the authors know, a study on competition in the cbkp_redit market among the dominant banks in Mexico based on the NEIO has not been carried out. Recommendations: Due to the above, the conclusions propose several recommendations on prudential regulation to promote greater competition. Conclusions: In the cbkp_redit sector, banks in Mexico have high market power with high financial margins in a Cournot oligopoly.

Año de publicación:

2021

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