Risk, Concentration and Market Power in the Banking Industry: Evidence from the Colombian System (1997-2006)


  • Documentos CEDE


  • This paper examines the relationship between risk, concentration and the exercise of market power by banking institutions. We use monthly balance-sheet and interest rate data for the Colombian banking system from 1997 to 2006. The evidence shows that, in the face of high risk, banks transfer a larger share of risk to customers through higher intermediation margins. The result suggests that systemic risk acts as a collusion device for banks: while high concentration is not enough to have collusion, the true effects of high market concentration on interest rates´ mark-ups emerge when the system is under stress.

fecha de publicación

  • 2007-11

Líneas de investigación

  • Banking
  • Concentration
  • Intermediation Margins
  • Market Power
  • Risk


  • 4385