This paper rigorously investigates the determinants of bank competition for 146 countries over the sample period 1999-2011. The results employing both the Lerner index and the Boone indicator, reveal the distinctive characteristics of the competition drivers across different income groups of countries. Amongst other things, a concentrated banking system jeopardises competitiveness in developing economies, however, such a causal nexus is absent for advanced and emerging economies. Contestability and institutional development seem to boost competition in less-developed banking systems, whereas inter-industry competition and financial freedom are beneficial to advanced banking systems. These findings survive robustness tests. © 2014 The Authors.
Mirzaei, A., & Moore, T. (2014). What are the driving forces of bank competition across different income groups of countries? Journal of International Financial Markets, Institutions and Money, 32(1), 38–71. https://doi.org/10.1016/j.intfin.2014.05.003