Concentration of Banking Sector and Loan Markups in Short Term: An Example from Poland

Vol.5,No.2(2014)

Abstract
The aim of this paper is to present an analysis of the relationship between concentration of the banking sector and banks' markups on offered loans. The markup is understood as the difference between the rate offered by banks and the reference rate fixed by the Monetary Policy Council. The period between 2009 and 2013 was analyzed. Monthly data from the Polish banking sector were considered. This paper also consists of the literature review, which focuses on the mortgage market. The methodology used for the analysis is based mainly on simple linear regression techniques. It is found that such methods are not sufficient to give conclusive answers. Therefore additional future research is proposed.

Keywords:
concentration of banking sector; loan markup; Poland
References

Adkins, L. C. (2010). Using gretl for Principles of Econometrics, Oklahoma State University.

Allen, J., Clark, R., Houde, J.-F. (2012). Price Competition and Concentration in Search and Negotiation Markets: Evidence from Mortgage Lending. Bank of Canada Working Paper, 2012-4.

Allen, F., Gale, D. (2000). Comparing Financial Systems, MIT Press. https://doi.org/10.1023/A:1012764518169

Allen, F., Gersbach, H., Krahnen, J.-P., Santomero, A. M. (2001). Competition Among Banks: Introduction and Conference Overview. European Finance Review, 5, pp. 1-11.

D'Arista, J. (2009). Financial Concentration. Wall Street Watch Working Paper, 3.

Augustyniak, H., Laszek, J., Olszewski, K., Waszczuk, J. (2013). Modelling of cycles in the residential real estate market - interactions between the primary and the secondary market and multiplier effects. National Bank of Poland Working Papers, 143.

Beck, T., Demirgüç-Kunt, A., Levine, R. (2003). Bank Concentration and Crises. NBER Working Paper, 9921.

Berger, A. N., Hannan, T.H. (1989). The price-concentration relationship in banking. The Review of Economics and Statistics, 71, pp. 291-299. https://doi.org/10.2307/1926975

Bergstresser, D. (2008). Market Concentration and Commercial Bank Loan Portfolios. Available at SSRN: http://ssrn.com/abstract=1291356.

Brzoza-Brzezina, M. (2005). Lending Booms in the new EU Member States. Will Euro Adoption Matter?. European Central Bank Working Papers, 543.

Calza, A., Monacelli, T., Stracca, L. (2013). Housing Finance and Monetary Policy. Journal of the European Economic Association, 11, pp. 101-122. https://doi.org/10.1111/j.1542-4774.2012.01095.x

Carletti, E., Hartmann, P. (2002). Competition and Stability: What's Special About Banking?. European Central Bank Working Papers, 146.

Chetty, R., Szeidl, A. (2004). Consumption commitments and asset prices. Paper presented at the 2004 SED Meeting.

Cipollini, A., Fiordelisi, F. (2008). The impact of bank concentration on financial distress: the case of the European banking system, Preprint (Preliminary version).

Cody, R. (2011). SAS Statistics by Example, SAS Institute.

Davis, M., Heathcote, J. (2005). Housing and the business cycle. International Economic Review, 46, pp. 751-784. https://doi.org/10.1111/j.1468-2354.2005.00345.x

Diebold, F. X. (2006). Elements of forecasting, Cengage Learning.

Eichengreen, B., Steiner, K. (2008). Is Poland at Risk of a Boom-and-Bust Cycle in the Run-Up to Euro Adoption?. NBER Working Paper, 14438.

Engle, R., Granger, C. (1987). Co-integration and error correction: representation, estimation, and testing. Econometrica, 55, pp. 251-276. https://doi.org/10.2307/1913236

Erel, I. (2011). The Effect of Bank Mergers on Loan Prices: Evidence from the United States. Review of Financial Studies, 24, pp. 1068-1101. https://doi.org/10.1093/rfs/hhp034

Favara, G., Imbs, J.M. (2010). Credit Supply and the Price of Housing. CEPR Discussion Paper, 8129.

Ferreira, C. (2013). Bank market concentration and bank efficiency in the European Union: a panel Granger causality approach. International Economics and Economic Policy, 10, pp. 365-391.

Fisher, I. (1933). The debt-deflation theory of great depressions. Econometrica, 1, pp. 337-357. https://doi.org/10.2307/1907327

Garmaise, M. J., Moskowitz, T. J. (2004). Bank mergers and crime: The real and social effect of credit market competition. NBER Working Paper, 11006.

González, V. M., González, F. (2008). Influence of bank concentration and institutions on capital structure: New international evidence. Journal of Corporate Finance, 14, pp. 363-375. https://doi.org/10.1016/j.jcorpfin.2008.03.010

Granger, C. (1981). Some properties of time series data and their use in econometric model specification. Journal of Econometrics, 16, pp. 121-130. https://doi.org/10.1016/0304-4076(81)90079-8

Granger, C., Newbold, P. (1974). Spurious regressions in econometrics. Journal of Econometrics, 2, pp. 111-120. https://doi.org/10.1016/0304-4076(74)90034-7

Greenwood, J., Hercowitz, Z. (1991). The allocation of capital and time over the business cycle. Journal of Political Economy, 99, pp. 1188-1214. https://doi.org/10.1086/261797

Hannan, T. H., Prager, R. A. (1998). Do substantial horizontal mergers generate significant price effects? Evidence from the banking industry. Journal of Industrial Economics, 46, pp. 433-452. https://doi.org/10.1111/1467-6451.00082

Herring, R. J., Wachter, S. (1998). Real Estate Booms and Banking Busts: An International Perspective. Paper presented at the Wharton Conference on Asian Twin Financial Crises 1998.

Hüfner, F. (2009). Adjusting Housing Policies in Slovakia in Light of Euro Adoption. OECD Economics Department Working Papers, 682.

Hwang, M., Quigley, J. (2006). Economic fundamentals in local housing markets: evidence from U.S. metropolitan regions. Journal of Regional Science, 46, pp. 425-453. https://doi.org/10.1111/j.1467-9787.2006.00480.x

Iacoviello, M. (2002). House Prices and Business Cycles in Europe: a VAR Analysis. Boston College Working Papers in Economics, 540.

KNF (2013). Dane o rynku. Available from http://www.knf.gov.pl/opracowania/sektor_bankowy/index.html.

Kokoszczyński, R. (2001). Structural changes in the Polish banking industry - three dimensions of consolidation processes in an emerging economy. BIS Papers 4 - The banking industry in the emerging market economies: competition, consolidation and systemic stability, pp. 118-122.

Kozak, S. (2008). Wpływ konsolidacji i koncentracji sektora bankowego na poziom cen w bankach. Przykład Stanów Zjednoczonych. Ekonomia, 21, pp. 120-138.

Kraciuk, J. (2006). Procesy konsolidacji w polskim sektorze bankowym. Problemy Rolnictwa Światowego, 15, pp. 282-292.

Lakic, S. (2013). Concentration in banking - A paradigm of manipulative control and power. Montenegrin Journal of Economics, 9, pp. 53-62.

Levine, R. (2004). Denying Foreign Bank Entry: Implications for Bank Interest Margins. In: (eds.) Ahumada, L.A., Fuentes, J.R., Central Banking, Analysis, and Economic Policies, Vol. 7, pp. 271-292.

Lissowska, M., Szulfer, J. (2012). Cykl mieszkaniowy a system bankowy - przypadek Polski. Prace i Materiały Instytutu Rozwoju Gospodarczego SGH, 88, pp. 85-118.

Łaszek, J., Augustyniak, H., Widłak, M. (2009). Euro a ryzyko bąbli na rynku nieruchomości mieszkaniowych. Materiały i Studia NBP, 238.

Micek, M. (2002). Teoretyczne podstawy konsolidacji w sektorze bankowym. Bank i Kredyt, 33, pp. 40-46.

NBP (2013). Statystyka stóp procentowych. http://www.nbp.pl/home.aspx?f=/statystyka/pieniezna_i_bankowa/oprocentowanie.html.

Nielsen, H. B. (2005). Lecture Notes on Econometrics 2, Københavns Universitet.

Parker, J. A. (2013). Lecture Notes on Theory and Practice of Econometrics, Reed College.

Pawłowska, M. (2003). Wpływ zmian w strukturze polskiego sektora bankowego na jego efektywność w latach 1997-2002 (podejście nieparametryczne). Bank i Kredyt, 11/12, pp. 51-65.

Pavlov, A., Wachter S. (2006). Aggressive Lending and Real Estate Markets. The Wharton School - University of Pennsylvania Working Paper, 566.

Piocha, S., Radlińska, K. (2010). Uwagi na temat kryzysu gospodarczego i sektora bankowego w Polsce. Zeszyty Naukowe Polityki Europejskie, Finanse i Marketing, 53, pp. 238-251.

Renaud, B. M. (2009). Mortgage Finance in Emerging Markets: Constraints and Feasible Development Paths. In: (eds.) Ben-Shahar, D., Leung, C.K.Y., Ong, S.E., Mortgage Markets Worldwide. Blackwell Publishing Ltd., pp. 253-288.

Rhoades, S. A. (1996). Competition and bank mergers: directions for analysis from available evidence. Antitrust Bulletin, 41, pp.339-364.

Rice, T., Strahan, P.E. (2010). Does Credit Competition Affect Small-Firm Finance. Journal of Finance, 65, pp. 861-889. https://doi.org/10.1111/j.1540-6261.2010.01555.x

Rogowski, W. (2001). Konkurencja na rynku usług bankowych - miary koncentracji. Bank i Kredyt, 33, pp. 43-51.

Rousseas, S. (1985). A markup theory of bank loan rates. Journal of Post Keynesian Economics, 8, pp. 135-144.

Rytelewska, G., Huszczonek, E. (2004). Zmiany w popycie na kredyt gospodarstw domowych. Materiały i Studia NBP, 172.

Santillán Salgado, R. J. (2011). Banking Concentration in the European Union during the Last Fifteen Years. Panoeconomicus, 58, pp. 245-266. https://doi.org/10.2298/PAN1102245S

Seko, M. (2003). Housing prices and economic cycles: evidence from Japanese Prefectures. Paper presented at the Nexus between the macro Economy and Housing - workshop.

Skinner, J. (1994). Housing and saving in the United States. In: (eds.) Noguchi, Y., Poterba, J., Housing Markets in the United States and Japan. University of Chicago Press, pp. 191-214.

Sørensen, C. K., Lichtenberger, J.-D. (2009). Mortgage Interest Rate Dispersion in the Euro Area. European Central Bank Working Papers, 733.

Stępień, K. (2004). Konsolidacja a efektywność banków w Polsce. CeDeWu.

Tsatsaronis, K., Zhu, H. (2004). What drives house price dynamics: cross-country evidence. BIS Quarterly Review, 03/2004, pp. 65-78.

Uhde, A., Heimeshoff, U. (2009). Consolidation in banking and financial stability in Europe: empirical evidence. IWQW discussion paper series, 02/2009.

Wen, Y. (2001). Residential investment and economic growth. Annals of Economics and Finance, 2, pp. 437-444.

Metrics

0

Crossref logo

0


356

Views

134

PDF views