Katalog GES



The quiet life hypothesis in banking: Evidence from German savings banks

1st Person: Koetter, Michael
Additional Persons: Vins, Oliver
Type of Publication: Paper
Language: English
Published: Univ., Fachbereich Wirtschaftswiss. 2008
Series: Working Paper Series: Finance & Accounting
Keywords: Sparkasse
Marktmacht
Einnahmen
Kosten
Wirtschaftliche Effizienz
Wettbewerb
Deutschland
Savings bank
Market power
Revenue
Costs
Efficiency
Competition
Germany
Online: https://www.econstor.eu/bitstream/10419/36642/1/587861053.pdf
Description: 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.

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