(1) Measuring competition in financial markets is complex due to their peculiar features, such as switching costs. Concentration, among other structural indicators, is not a good proxy for competition. Although antitrust authorities use measures of market concentration, such as market shares and HHI, to make an initial assessment of competition, these structural measures are only a first step in analyzing whether concentration will create or enhance the exercise of market power. Market contestability, for example, is also important for evaluating competition in financial markets. The existence of entry barriers, as well as activity restrictions and other rigidities, must be taken into account in evaluating financial firms‘ behaviour, both in a static and in a dynamic sense.
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The OECD holds a roundtable on competition, concentration and stability in the banking sector
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