Abstract

MENDEZ-HERAS, Lizethe Berenice; VENEGAS-MARTINEZ, Francisco  and  LINTHON-DELGADO, Diego Emilio. Competition in the credit market among dominant banks in Mexico. Rev. mex. econ. finanz [online]. 2021, vol.16, n.spe, e699.  Epub Sep 05, 2022. ISSN 2448-6795.  https://doi.org/10.21919/remef.v16i0.699.

Objective: This research measures the degree of competition of the banks that dominate the credit market in Mexico in 2004-2016. To do that, the non-structural approach of competition measures based on the theory of the New Empirical Industrial Organization (NEIO) is used. Methodology: A model of simultaneous equations with Generalized Least Squares in 2 Stages (GLS2E) is estimated in panel data to obtain the conjectural variation statistic, which measures the degree of coordination among the banks. Results: The empirical evidence obtained suggests that the dominant banks have a Cournot oligopolistic behavior in 2004-2016. Implications: Contrary to what was expected, the research also suggests that the increase in bank fees has had a positive effect on the demand for credit. Originality: As far as the authors know, a study on competition in the credit market among the dominant banks in Mexico based on the NEIO has not been carried out. Recommendations: Due to the above, the conclusions propose several recommendations on prudential regulation to promote greater competition. Conclusions: In the credit sector, banks in Mexico have high market power with high financial margins in a Cournot oligopoly.

Keywords : Banking Competition; credit market; Data Panel; Mexico.