Harvard University Press

A new measure of firm-level competition: an application to euro area banks

Retrieved on: 
Thursday, April 18, 2024

Abstract

Key Points: 
    • Abstract
      This paper extends Boone (2008) by introducing a competition measure at the individual
      firm level rather than for an entire market segment.
    • We apply this extended Boone indicator to individual bank-level competition
      in the loan market in the four largest euro area countries and Austria.
    • Our new measure of firm-level competition enriches and complements
      other competition measures and provides a promising starting point for future market
      power analyses.
    • The only measure among non-structural measures that is based on the
      concept of competition as a process of rivalry is the Boone (2008) indicator.
    • We introduce
      a new performance measure of competition by extending the Boone indicator to the
      individual firm level.
    • Introduction
      The ability to reliably measure competition is valuable to researchers, analysts, and
      policymakers, especially antitrust authorities, financial supervisors, and central banks.
    • One broad
      category of indicators often used to measure competition are structural competition
      measures, such as static concentration measures, and dynamic measures, e.g., entry and
      exit rates.
    • Out of these measures, the only measure based on the
      concept of competition as a process of rivalry is the Boone indicator.
    • This study introduces a new performance measure of competition by extending the
      Boone indicator to the individual firm level.
    • It thus measures the
      increase in profits in percent of one percentage point increase in efficiency, with marginal
      costs as measure of efficiency.
    • We extend the theoretical
      underpinning of the measurement of competition for the entire market of Boone (2008) by
      a new measure of individual firm-level competition.
    • A concern of the literature is the gap
      between the practical application and the theoretical framework of Boone (2008).
    • We introduce within the same theoretical
      framework a new measure of competition on firm level, the MRP.
    • Our new
      measure significantly augments the antitrust evaluative framework by shedding light on
      whether a merger results in a less competitive market.
    • Our novel indicator focuses on
      firms? incentives to enhance their relative efficiency, as manifested in the elasticity
      between relative profits and efficiency.
    • However, an inefficient firm that is foreclosed could be more
      competitive than the larger efficient firm that relies on its scale economies.
    • Our new metric of competition unveils
      banks? ability to influence their profitability in the short term by cutting costs relative to
      their peers.
    • The new MRP indicator provides the ability to assess the impact
      of individual banks? competitiveness on their interest rate-setting behaviour in loan
      markets.
    • Incorporating this information promises a more refined understanding of the impact and
      timing of monetary policy rates changes on the real economy.
    • Section 3 introduces within the Boone
      (2008) theoretical framework our new measure of individual firm-level competition,
      including the interpretation of the MRP.
    • Section 4 provides an application of our new
      ECB Working Paper Series No 2925

      6

      individual firm-level competition measure to the loan market.

    • The StructureConduct-Performance paradigm (SCP) provides a traditional framework in the field of
      industrial organization for analysing competition behaviour in markets.
    • Concentrated
      markets ease the possibilities to collude implicitly or explicitly and therefore concentrated
      markets result in higher prices and profits.
    • For example, a tougher competition
      setup may lead to a reallocation of market shares, potentially forcing some firms to exit
      the market.
    • This approach gives firms? strategic behaviour
      central stage and focuses on the strategic interaction on prices and quantities, known as
      conjectural variation.
    • Another measure from
      this strand of literature is the H-statistic developed by Panzar and Rosse (1987).
    • The only competition measure from this performance literature where competition is the
      outcome from a process of rivalry is the Boone indicator.
    • A continuous and monotonically increasing relationship exists between
      RPD and the level of competition if firms are ranked by decreasing efficiency.
    • (2013) compare the Boone indicator with the price-cost margin
      and conclude that the profit elasticity is a more reliable measure of competition.
    • The high
      elasticity of profits to efficiency unequivocally indicates that the high market shares and
      therefore high profits are due to high efficiency.
    • A firm that quickly passes changes to the input prices is seen as a price
      taker with little market power.
    • Indicators of competition tend to measure different phenomenon and may provide
      conflicting messages, as reported for European banking by Carbo et al.
    • Application 2: Test the ?quiet life? and related market structure hypotheses using the
      MRP as competition or market structure measure.
    • Data
      Our application to individual bank-level competition in the euro area loan market uses
      balance sheet and income statement data from the Moody?s Analytics BankFocus for the
      calendar years 2013-2020.
    • As such, most publications
      on competition in the euro area includes the largest four member states.
    • Due to these restrictions the database was reduced to an unbalanced panel of up to 1862
      banks (depending on the year) from five euro area countries.
    • Application 1: Measure bank competition using MRP
      Looking at the distribution of the MRP for individual banks (Fig.
    • A similar finding for the four largest euro area countries as a group is
      reported in Carbo et al.
    • Application 2: Test of market structure hypotheses using MRP
      Our new measure of individual-bank competition can be used to test market structure
      theories.
    • Euro area banks? market power,
      lending channel and stability: the effects of negative policy rates, European Central Bank
      Working Paper, 2790 (February).
    • A
      new approach to measuring competition in the loan markets of the euro area, Applied
      Economics, 43 (23), 3155?3167.
    • Impact of bank competition on the interest rate pass-through in the euro area, Applied
      Economics, 45 (11), 1359?1380.

American Institutes for Research Announces New CEO and Board Chair

Retrieved on: 
Wednesday, February 21, 2024

Lawrence D. Bobo , the dean of social science at Harvard University, is the new chair of the AIR Board of Directors.

Key Points: 
  • Lawrence D. Bobo , the dean of social science at Harvard University, is the new chair of the AIR Board of Directors.
  • Heppen is the seventh president and CEO in AIR’s 77-year history, and the first woman to serve in the role.
  • She stepped down from the AIR Board of Directors after serving as its chair for more than 25 years.
  • Bobo has been a member of the AIR Board since 1997 and most recently served as vice chair.

'No woman in the usual sense': Ilse Koch, the 'Bitch of Buchenwald', was a Holocaust war criminal – but was she also an easy target?

Retrieved on: 
Tuesday, September 5, 2023

In her indictment, the prosecutor described Ilse Koch as “a sexy-looking depraved woman who beat prisoners, reported them for beatings, and trafficked human skin”.

Key Points: 
  • In her indictment, the prosecutor described Ilse Koch as “a sexy-looking depraved woman who beat prisoners, reported them for beatings, and trafficked human skin”.
  • Ilse’s husband, Karl Koch, had been commandant of Buchenwald, one of the first and largest concentration camps within Germany’s 1937 borders, from August 1937 to October 1941.
  • He would then briefly serve as a commander of Majdanek, another notorious concentration camp.
  • Read more:
    It's not just about the rise in anti-Semitism: why we need real stories for better Holocaust education in Australia

Joined the Nazi party ‘early’

    • She joined the Nazi party earlier than most of her peers, in 1932.
    • At the time, the Nazi party appealed to young people because fascism seemed a viable solution to the deep economic recession that had followed the first world war, and had impoverished many German families.
    • Koch lived with her family in a three-story villa on the grounds of the Buchenwald concentration camp.
    • The executions of Buchenwald prisoners, writes Jardim, occurred in multiple forms: “shooting, hanging, gassing, corporal punishment, experiments withholding food and [the] refusal of medical care”.

Tried for awareness and participation

    • The officers who made up the military courts at Dachau were, writes Jardim, “honest and competent men”, but they were not lawyers or professional jurists.
    • Dressed up and with her head held high, Margarete Ilse Koch entered the courtroom.
    • She was the only woman among 31 indicted for the war crimes and crimes against humanity committed in Buchenwald.
    • And she was tried for her alleged awareness of the camp’s nature, and her voluntary and active participation in its enforcement.

‘A creature from some other tortured world’

    • Ironically, the executions of 50,000 people at Buchenwald were “not wrongful according to the National Socialist system”.
    • They became centres where food and other valuable items could find their way onto the black market.
    • In the 1947 trials, American prosecutor Denson described Koch as “no woman in the usual sense but a creature from some other tortured world”, making her a powerful symbolic representation of Nazi crimes.
    • The court concluded that there was no overwhelming or substantial evidence against Koch and commuted her sentence to four years imprisonment.

‘Diabolical’

    • Mounting criticisms of the court’s finding of clemency erupted into public protests.
    • However, in the same year as her release, she was charged again – this time by the Western German authorities.
    • While Jardim cites original data from the trial, there is still some confusion about the exact numbers attached to Koch’s charges.

Women and war crimes

    • Studies on Ilse Koch have possibly been more common than those on other women war criminals, because the media sensationalised her story.
    • Ilse Koch on Trial reminds us that women, too, are capable of committing war crimes.
    • While it’s normalised that men can kill, especially in war, women are still stereotyped as peaceful and nurturing – which is reflected in the gendered reactions to women war criminals.
    • While no one denies Ilse Koch was guilty of terrible crimes, the most sensational atrocities attributed to her remain unproven.

Yellow Corporation Names New Board Member

Retrieved on: 
Tuesday, April 25, 2023

NASHVILLE, Tenn., April 25, 2023 (GLOBE NEWSWIRE) -- Yellow Corporation (NASDAQ: YELL) has appointed David H. Webber to its Board of Directors, effective April 20, 2023.

Key Points: 
  • NASHVILLE, Tenn., April 25, 2023 (GLOBE NEWSWIRE) -- Yellow Corporation (NASDAQ: YELL) has appointed David H. Webber to its Board of Directors, effective April 20, 2023.
  • Webber is also the author of the critically acclaimed book, The Rise of the Working-Class Shareholder: Labor’s Last Best Weapon, published by Harvard University Press.
  • He was selected by the International Brotherhood of Teamsters to join the Board of Directors pursuant to its director appointment rights as the holder of Yellow’s Series A Voting Preferred Stock.
  • “We are pleased to welcome David to the board,” said Matt Doheny, chairman of Yellow’s Board of Directors.

Faculty "Dream Projects" Funded Through $100K Grant Program

Retrieved on: 
Tuesday, July 19, 2022

REDWOOD CITY, Calif., July 19, 2022 /PRNewswire/ -- Course Hero, the popular learning platform used by a global community of students and educators to contribute and share educational resources, today announced fifty one educators are among the first to access grants designed to fund a wide range of faculty submitted digital pedagogy "dream projects."

Key Points: 
  • At the start of the pandemic, digital learning approaches were deemed a short-term solution, but a growing number of faculty now use them as an integral piece of the puzzle."
  • Examples of faculty projects include:
    Paul Quinn College adjunct faculty member Jennifer Vidrine will use a $2,000 grant to help students combat food insecurity after the neighborhood in which the HBCU is located lost its only grocery store during the pandemic.
  • More than 100,000 faculty across the U.S. and Canada use Course Hero to share their resources with the community, collaborate with other faculty, and hone new strategies for instruction.
  • Every day, students, educators and tutors on Course Hero help more than 20 million students make every study hour count.

Jennifer Cole and Laura Cunningham Join Westchester Education Services

Retrieved on: 
Wednesday, June 1, 2022

DAYTON, Ohio, June 1, 2022 /PRNewswire-PRWeb/ -- Westchester Education Services is excited to announce that education industry veterans Jennifer Cole and Laura Cunningham have recently joined the company's management team. Each will serve in newly created Content Director roles.

Key Points: 
  • DAYTON, Ohio, June 1, 2022 /PRNewswire-PRWeb/ -- Westchester Education Services is excited to announce that education industry veterans Jennifer Cole and Laura Cunningham have recently joined the company's management team.
  • Gray, President and Chief Content Officer of Westchester Education Services, stated, "As Content Directors, Laura and Jennifer each bring a wealth of industry-specific knowledge and leadership capabilities.
  • Since that time, Westchester Publishing Services has launched Westchester Education Services, based in Dayton, Ohio, to serve the needs of educational publishers and ed-tech providers, as well as Westchester Publishing Services UK, based in Stratford upon Avon, to provide added services for publishers in the United Kingdom and Europe.
  • Westchester Education UK and International, also based in Stratford upon Avon support our education and ed-tech clients located outside the Americas region with market-specific education content development services.

HomeStart Aims to Save Families from Eviction by Selling Digital Apartments in the Metaverse

Retrieved on: 
Wednesday, May 4, 2022

NEW YORK, May 4, 2022 /PRNewswire/ -- HomeStart, a not-for-profit organization dedicated to ending homelessness, is launching a project called INVERSE to help families on the brink of eviction by selling digital apartments in the metaverse. The price of the apartments starts at one Ethereum (ETH), which is around $3000, and approximately what it costs to halt an eviction and provide 12 months of support for a family in a major city in the United States.

Key Points: 
  • HomeStart is selling NFT apartments in the Metaverse to raise donations and shine a light on homelessness in the real world.
  • NEW YORK, May 4, 2022 /PRNewswire/ -- HomeStart, a not-for-profit organization dedicated to ending homelessness, is launching a project called INVERSE to help families on the brink of eviction by selling digital apartments in the metaverse.
  • HomeStart is partnering with Cornerstone , the first photorealistic metaverse, to build an apartment complex in its new virtual world.
  • HomeStart was given early access to Cornerstone for this project, and people who buy apartments will be some of the first who can enter the virtual world.

Clarivate Commits to #StandWithUkraine with Launch of Resource Center for Displaced Researchers

Retrieved on: 
Monday, March 28, 2022

LONDON, March 28, 2022 /PRNewswire/ -- Clarivate Plc (NYSE: CLVT), a global leader in providing trusted information and insights to accelerate the pace of innovation, today launched a package of valuable Clarivate resources of software tools, information and insights to support displaced researchers from Ukraine. The resource center also contains news and content to help raise the profile, knowledge and understanding of Ukraine across the world. The launch of these resources follows the statement made by Clarivate, that it will cease all commercial activities in Russia, issued March 11.  

Key Points: 
  • The resource center also contains news and content to help raise the profile, knowledge and understanding of Ukraine across the world.
  • The launch of these resources follows the statement made by Clarivate, that it will cease all commercial activities in Russia, issued March 11.
  • An online dedicated resource center will provide immediate access to the following solutions and content, as Ukraine seeks to accelerate the pace of their research and discovery.
  • Clarivate is providing extended roaming access and offering accounts for researchers to ensure continued access to provide immediate assistance to the Ukrainian research community.

Clarivate Commits to #StandWithUkraine with Launch of Resource Center for Displaced Researchers

Retrieved on: 
Monday, March 28, 2022

LONDON, March 28, 2022 /PRNewswire/ -- Clarivate Plc (NYSE: CLVT), a global leader in providing trusted information and insights to accelerate the pace of innovation, today launched a package of valuable Clarivate resources of software tools, information and insights to support displaced researchers from Ukraine. The resource center also contains news and content to help raise the profile, knowledge and understanding of Ukraine across the world. The launch of these resources follows the statement made by Clarivate, that it will cease all commercial activities in Russia, issued March 11.  

Key Points: 
  • The resource center also contains news and content to help raise the profile, knowledge and understanding of Ukraine across the world.
  • The launch of these resources follows the statement made by Clarivate, that it will cease all commercial activities in Russia, issued March 11.
  • An online dedicated resource center will provide immediate access to the following solutions and content, as Ukraine seeks to accelerate the pace of their research and discovery.
  • Clarivate is providing extended roaming access and offering accounts for researchers to ensure continued access to provide immediate assistance to the Ukrainian research community.

Westchester Publishing Services Announces Key Appointments and Promotions Within the Management Team

Retrieved on: 
Monday, January 24, 2022

DANBURY, Conn., Jan. 24, 2022 /PRNewswire-PRWeb/ -- Westchester Publishing Services has announced several key promotions and appointments to the senior management team, effective immediately.

Key Points: 
  • DANBURY, Conn., Jan. 24, 2022 /PRNewswire-PRWeb/ -- Westchester Publishing Services has announced several key promotions and appointments to the senior management team, effective immediately.
  • All three will report to Paul J. Crecca, President & Chief Executive Officer of Westchester Publishing Services.
  • Westchester Publishing Services was founded in 1969 and is a trusted partner to the publishing industry, with an expanding array of editorial, composition, design, and digital conversion services.
  • Since that time, Westchester Publishing Services has launched Westchester Education Services, based in Dayton, Ohio, to serve the needs of educational publishers and ed tech providers, as well as Westchester Publishing Services UK, based in Stratford upon Avon, to provide added services for publishers in the United Kingdom and Europe.