Question

What is the difference between concentration and competition measures in banking? Article needed to be seen: https://www.economist.com/node/3959367/print?story_id=3959367

(1,000 words) with a brief introduction and conclusion

Answer 1

Concentration in banking industry indicates market shares of each banks in sector. Higher concentration indicates higher prices for customers and can create upward trend in prices.

Competition albeit means the number of banks present. Higher competition leads to price stability and customers are at advantages.

Across Europe, various banks have stringent protocols of lending for customers beyond certain threshold value and requires customer financial positions. Also banks are free to chose supervisors or regulators who check such measures causing financial system to br messy or favored and leading to full blown crisis.

Hence it is very important for banks with high concentration in market have similar and harmonised regulations and authorities to adhere to stringent laws and framework.