Rainer Schwabe discusses how competition affects local bank accounts in Mexico in this Review of Industrial Organization article.
The authors document a positive relation between bank competition and the presence of bank accounts at the local level in Mexico. Using a two-stage estimation approach based on an equilibrium structural model, they demonstrate that moving from a monopoly to a duopoly will lead to a 40 percent increase in bank accounts over the cross-market mean. Dr. Schwabe and his coauthor conclude that countries should prioritize policies that facilitate bank competition.
This article was originally published in the Review of Industrial Organization.
The views expressed herein do not necessarily represent the views of Cornerstone Research.