Risk, concentration and market power in the banking industry : evidence from the Colombian System (1997-2006)

This paper examines the relationship between risk, concentration and the exercise of market power by banking institutions. We use monthly balance-sheet and interest rate data for the Colombian banking system from 1997 to 2006. The evidence shows that, in the face of high risk, banks transfer a larger share of risk to customers through higher intermediation margins. The result suggests that systemic risk acts as a "collusion" device for banks: while high concentration is not enough to have collusion, the true effects of high market concentration on interest rates' mark-ups emerge when the system is under stress.

• Autores: Tovar Mora, Jorge Andrés; Jaramillo Herrera, Christian Rafael; Hernández, Carlos Arturo
• Tipo de recurso: Work document
• Fecha de publicación: 2007
• Institución: Universidad de los Andes
• Repositorio: Séneca: repositorio Uniandes
• Idioma: eng
• OAI Identifier: oai:repositorio.uniandes.edu.co:1992/8181
• Acceso en línea: http://hdl.handle.net/1992/8181
• Palabra clave: Banking; Market power; Risk; Concentration; Intermediation margins; Bancos - Colombia - 1997-2006; Mercado de valores - Colombia - 1997-2006; Riesgo crediticio - Colombia - 1997-2006; Concentración del capital - Colombia - 1997-2006; G21, G34, G38, L11
• Rights: openAccess
• License: http://creativecommons.org/licenses/by-nc-nd/4.0/