Evolution in the market power of financial intermediation services in Argentina: a structural empirical analysis (2005 - 2007)

Abstract

The low depth of the Argentine financial system has raised questions about its development potential, even under contexts of relatively favorable macroeconomic expectations. Contributing to the analysis of this key industry, this work develops a methodology to measure the evolution of the market power of the financial intermediation system. The structural model follows the guidelines proposed by the “New Empirical Industrial Organization” (NEIO) and the “discrete choice” literature, with adaptations for the analysis of this particular industry in the local market. Among the results obtained, there is evidence that supports the presence of market power in the financial intermediation industry. However, there are signs of some increase in the degree of competition. This work contributes to the literature applied to the local market. The proposed approach models the production of the industry, considering the duality of intermediation services.

JEL classification: G21 ; L11 ; L13 ; C8 ; C33