Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/36642
Authors: 
Koetter, Michael
Vins, Oliver
Year of Publication: 
2008
Series/Report no.: 
Working paper series // Johann-Wolfgang-Goethe-Universität Frankfurt am Main, Fachbereich Wirtschaftswissenschaften Finance & accounting 190
Abstract: 
The quiet life hypothesis (QLH) posits that banks enjoy the advantages of market power in terms of foregone revenues or cost savings. We suggest a united approach to measure competition and efficiency simultaneously to test this hypothesis. We estimate bank-specific Lerner indices as measures of competition and test if cost and profit efficiency are negatively related to market power in the case of German savings banks. We find that both market power and average revenues declined among these banks between 1996 and 2006. While we find clear evidence supporting the QLH, estimated effects of the QLH are small from an economical perspective.
Subjects: 
Savings banks
competition
efficiency
quiet life hypothesis
JEL: 
E42
E52
E58
G21
G28
Document Type: 
Working Paper

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