OLIGOPOLY IN LOAN AND DEPOSIT MARKETS - AN ECONOMETRIC APPLICATION TOTHE NETHERLANDS

This paper presents evidence on the degree of oligopoly in Dutch loan and deposit markets. Using cointegration tests, dynamic specifications are developed for the demand for mortgages, the supply of savings dep osits and the associated interest rates. Simultaneous estimation of th is model over the period 1957-1990 reveals that in recent years, both markets were significantly more oligopolistic than in Cournot equilibr ium. However, competition for mortgages has significantly intensified since the late 1950s. The degree of oligopoly in the marker for saving s deposits, on the other hand, shows a significant rise over the sampl e period, probably owing to increased market concentration.