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| Author: | Barros, F. Modesto, L. |
| Title: | Portuguese banking sector: A mixed oligopoly ? |
| Journal: | International Journal of Industrial Organization
1999 : AUG, VOL. 17:6, p. 869-886 |
| Index terms: | Banking Oligopoly Regulations Interest rates Models Portugal Europe |
| Language: | eng |
| Abstract: | In this paper, it is investigated whether one can find evidence of a regulatory intervention in the Portuguese banking sector. Using panel data, a simple oligopoly model is developed and estimated where one public bank competes in prices with several private banks. It is assumed that private banks maximize profits and that the public bank is instructed to maximize an objective function that depends on the profits of the public bank and on the public bank's revenues from deposits and loans, evaluated at their respective opportunity costs. Empirical evidence is found supporting the existence of a regulatory intervention in the loans market, which aimed at reducing the equilibrium interest rates paid on loans. However, in the deposits markets the empirical results do not support the hypothesis of the existence of internal regulatory devices. |
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