Cultural Affinity, Regulation, and Market Structure: Evidence from the Canadian Retail Banking Industry

• 成果类型: Article
• 署名作者: Perez-Saiz, Hector; Xiao, Hongyu
• 署名单位: International Monetary Fund; University of Pennsylvania; Bank of Canada
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20180044
• 发表日期: 2022
• 页码: 451-489
• 关键词: competition; KNOWLEDGE; entry; language; moments; barriers; mergers; CHOICE; size; firm

摘要

We estimate a perfect information static entry game to study the effect of cultural entry barriers on entry and competition in the retail banking industry. Canada provides a favorable setting for analysis due to its high linguistic diversity, concentrated market, and regulatory entry barriers. We find that cultural affinity between customers and financial institutions that share a common cultural origin plays an important role in explaining the comparative advantages of these institutions in certain markets. Using several counterfactual experiments and additional empirical evidence, we show that the effectiveness of regulations intended to foster competition is significantly limited by cultural barriers, which is a key determinant that shapes the competitive landscape of the industry. )