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

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper Series: Finance & Accounting ; No. 190

Classification and Topics

• Classification: Wirtschaft ; Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems ; Monetary Policy ; Central Banks and Their Policies ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financial Institutions and Services: Government Policy and Regulation
• Subject: Savings banks ; competition ; efficiency ; quiet life hypothesis ; Sparkasse ; Marktmacht ; Einnahmen ; Kosten ; Wirtschaftliche Effizienz ; Wettbewerb ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Koetter, Michael ; Vins, Oliver
• Event: Veröffentlichung
• (who): Johann Wolfgang Goethe-Universität Frankfurt am Main, Fachbereich Wirtschaftswissenschaften
• (where): Frankfurt a. M.
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/36642
• Last update: 10.03.2025, 11:42 AM CET