A Theoretical and Empirical Framework for the Analysis of Profitability, Competition and Efficiency
Economic literature pays a great deal of attention to the performance of banks, expressed in terms of competition, concentration, efficiency, productivity and profitability. This book provides an all-embracing framework for the various existing theories in this area and illustrates these theories with practical applications.
Evaluating a broad field of research, the book describes a profit maximizing bank and demonstrates how several widely-used models can be fitted into this framework. The authors also present an overview of the current major trends in banking and relate them to the assumptions of each model, thereby shedding light on the relevance, timeliness and shelf life of the various models. The results include a set of recommendations for a future research agenda.
Offering a comprehensive analysis of bank performance, this book is useful for all of those undertaking research, or are interested, in areas such as banking, competition, supervision, monetary policy and financial stability.
Table of Contents
Part 1: Background 1. Introduction 2. Production of the Banking Firm 3. Regulation of the Banking Firm Part 2: Theoretical Framework 4. Basic Model of Bank Performance 5. Market Power Models 6. Efficiency of Banks 7. Synthesis Part 3: Trends in Banking 8. Trends and the Basic Framework Part 4: Empirical Results 9. Data 10. The Bresnahan Model 11. Panzar-Rosse Model 12. Structure-Conduct-Performance-Model 13. Cournot Model 14. X-Efficiency 15. Scale and Scope Economies 16. Synthesis: The Measurement of Competition and Efficiency Part 5: Conclusions 17. Summing Up 18. Research Agenda
Jacob Bikker is senior researcher at the Strategy Department, Supervisory Policy Division, De Nederlandsche Bank (DNB) and professor in Banking and financial regulation at Utrecht University School of Economics, the Netherlands.
Jaap Bos is assistant professor of Finance and financial markets at Utrecht University School of Economics, the Netherlands.