Ultimate Ownership and Bank Competition
Open accessAbstract
We document substantial time-series and cross-sectional variation in branch-level deposit account interest rates, maintenance fees, and fee thresholds, and examine whether variation in bank concentration helps explain variation in these prices. HHI alone is not correlated with any of the outcome variables. A “generalized HHI” (GHHI) capturing both common ownership (the degree to which banks are commonly owned by the same investors) and cross-ownership (the extent to which banks own shares in each other), is strongly correlated with all prices, even when we limit cross-sectional variation in bank ownership to only that predicted by the growth of index funds.
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Omitting common ownership from regressions of price on industry concentration (HHI) leads to a negative omitted variable bias on the HHI coefficient.
“That paper also shows that omitting common ownership from regressions of price on industry concentration (HHI) leads to a negative omitted variable bias on the HHI coefficient.”
From Anticompetitive Effects of Common Ownership (2018) · cites this paper as Azar, Raina, and Schmalz (2016)
Azar, Raina, and Schmalz (2016) show that the combination of common ownership and cross-ownership of US banks cause higher prices of retail deposit products.
“In particular, Azar, Raina, and Schmalz (2016) show that the combination of common ownership and cross-ownership of US banks cause higher prices of retail deposit products, using within-bank variation across branches over time and variation in county-level common ownership that results from index fund growth as an instrument.”
From Anticompetitive Effects of Common Ownership (2018) · cites this paper as Azar, Raina, and Schmalz (2016)
Similar results have been found in other industries and with other econometric methods.
“However, since making our study available online, similar results have been found in other industries and with other econometric methods, which may enhance confidence in the external validity of our results.”
From Anticompetitive Effects of Common Ownership (2018) · cites this paper as Azar, Raina, and Schmalz (2016)
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Anticompetitive Effects of Common Ownership
AZAR, J., SCHMALZ, M. C., & TECU, I. (2018) · The Journal of Finance · doi:10.1111/jofi.12698 · Cited by 980 · see citing works
Self-citationThe rise of financial investment and common ownership in global agrifood firms
Clapp, J. (2019) · Review of International Political Economy · doi:10.1080/09692290.2019.1597755 · Cited by 131 · see citing works
- Authors
- Azar, J., Raina, S., & Schmalz, M. C.
- Affiliations
- IESE Business School (ES)
- University of Alberta (CA)
- University of Oxford (GB)
- Corresponding author
- Raina, Sahil
- Venue
- Financial Management
- Publisher
- Elsevier BV
- Published
- 2016
- Volume
- 51
- Issue
- 1
- Pages
- 227-269
- ISSN
- 0046-3892 (ISSN-L)
- OpenAlex
- W3176751622
- Cited by
- 327
- References
- 0
- Citations by year
- 2026: 30 · 2025: 43 · 2024: 42 · 2023: 28 · 2022: 34 · 2021: 25 · 2020: 29 · 2019: 36 · 2018: 27 · 2017: 22 · 2016: 8 · 2015: 2 · 2014: 1
- FWCI
- 26.72
- Type
- journal article
- Language
- en
- Open access
- green
- doi.org
- Locations
- Financial Management (publishedVersion)
- SSRN Electronic Journal (acceptedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Finance › Banking stability, regulation, efficiency
- Social Sciences › Business, Management and Accounting › Accounting › Corporate Finance and Governance
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Merger and Competition Analysis
- Keywords
- ultimate ownership, bank competition, bank concentration, deposit interest rates, maintenance fees, collective ownership, cross-shareholding, Herfindahl-Hirschman index, index funds
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