This paper analyzes
the competitive behavior of Austrian banks with no or only one rival branch
within their local home markets (municipalities). For that, we examine the
association of several bank-level indicators, calculated for the period
1999-2014, with characteristics of the community and the nearest contestant.
While it can be observed that competition measures, at least on average, do not
vary tremendously across bank cohorts, rival proximity plays a differential
role: monopolists exhibit larger mark-ups with increasing rival distance,
whereas competition is strengthened in more remote duopolistic markets.
Together with the observation that certain market features affect conduct as
well, our results give rise to several policy recommendations.
JEL classification numbers: G21, L10, R51
Banking, Local Markets, Rival Distance