Ownership structure and market conduct among Swiss banks

Abstract

This paper explores the degree of competition among each of several major categories of Swiss banks, using a structural econometric model. Conduct is found to vary across ownership structures, with foreign-owned banks exhibiting the most market power and state-owned or mutual banks the least. The results are consistent with agency theory but contrast with some previous empirical results. They are also consistent with a Swiss premium in the provision of international banking services, though this latter hypothesis is not formally tested.