This paper examines banking competition in Florida by measuring and comparing the Hirschman-Herfindahl Index (HHI), critical mass, and several other competition measures.
First, the model and resulting competition measure calculations are explained. Second, the model is applied to banks in Florida and the results are given. Third, the results are discussed and the paper is concluded. Previous research showed that using the HHI in market power models can lead to erroneous results, a new measure was introduced: the critical mass.
The results for the HHI and the C3 ratio’s lead to the conclusion that there is a low concentration in the market, while the results for the critical mass show that all banks in the market have power and that the market is highly concentrated. These conflicting results cannot be completely explained by changes of key variables over time. An extension of the data set with more recent data is needed to determine which concentration measure is right.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- The model
- Results
- Descriptives and the HHI
- Critical mass
- Time analysis
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper investigates bank competition in Florida by examining and comparing various market concentration measures, specifically the HHI and the critical mass. The study aims to shed light on the effectiveness of these measures in accurately reflecting market concentration and their implications for understanding banking competition in the state.
- Evaluation of the HHI and critical mass as measures of market concentration
- Analysis of the relationship between market concentration and competition in the Florida banking market
- Exploration of the factors influencing the effectiveness of different concentration measures
- Comparison of the findings obtained from the HHI and critical mass
- Investigation of the temporal trends in market concentration and key variables in the Florida banking market
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This chapter introduces the study, highlighting the limitations of the HHI as a measure of market concentration and introducing the critical mass as an alternative. It sets the stage for the examination of bank competition in Florida using these measures.
- The model: This chapter details the models used to calculate the HHI and critical mass, explaining the underlying assumptions and methodology for measuring market concentration.
- Results: This chapter presents the empirical findings, covering the descriptive statistics, HHI analysis, critical mass calculations, and time trend analysis.
Schlüsselwörter (Keywords)
The study focuses on bank competition, market concentration, the Hirschman-Herfindahl Index (HHI), critical mass, Florida banking market, market power, conjectural variation, Lerner index, and time analysis. The research delves into the nuances of measuring market concentration and its implications for understanding competitive dynamics in the Florida banking industry.
- Quote paper
- Colin Tissen (Author), 2017, Examining Bank Competition in Florida. Using Critical Mass as an Improved Competition Measure, Munich, GRIN Verlag, https://www.grin.com/document/376746
