Pressemitteilung BoxID: 640690 (Frankfurt School of Finance & Management gGmbH)
  • Frankfurt School of Finance & Management gGmbH
  • Adickesallee 32-34
  • 60322 Frankfurt am Main
  • Ansprechpartner
  • Elisa Antz
  • +49 (69) 154008-566

Professor Koetter publishes expert opinion for autumn report by Council of Economic Experts

(PresseBox) (Frankfurt am Main, ) For the 2013/14 autumn report issued by the German Council of Economic Experts, Professor Dr. Michael Koetter, Professor of Banking and Finance at Frankfurt School of Finance & Management, was asked by the Council and the Monopolies Commission to draw up an expert opinion entitled "Market Structures and Competition in the German Banking Industry". His review includes a practical analysis of the structure of and competitive trends within the banking industry, and the corresponding impact on economic growth in real terms.

The study shows that since 1993, a subset of major banks in particular recorded the largest increase in market share. At the same time, however, empirical analysis shows that economic margins steadily shrank until the outbreak of the financial crisis in 2007. Thus market share as such is only of limited value in assessing the intensity of competition within the German banking industry. Since 2008, however, it has become clear that it represents an increasingly useful indicator for measuring banks' market power. The impact of regional banks' market power on real economic growth over the entire period under review since 1993 is only mildly negative. But in the case of the subset of significantly larger banking operations, it is clear that the banks' increasing market power has had a significant negative impact on real economic growth, especially after the bank bailouts at the start of the crisis. One reason for this is the (mis)allocation of factors of production to businesses characterized by below-average productivity - something more likely to arise when banks enjoy greater market power.

Interested readers may download the expert opinion from Professor Koetter's website or find it attached as pdf-document.