THE IMPACT OF CONCENTRATION AND REGULATION ON COMPETITION IN THE DUTCH MORTGAGE MARKET

This article investigates the effects of industry structure and regulatory pricing constraints on competition in the Dutch mortgage market during the global financial crisis that began in 2008. This highly concentrated market became even more concentrated following the financial crisis, when some major banks became subject to price constraints imposed by the European Commission. I estimate the impact of these events on the Lerner Index per bank subsidiary over the period from 2005 to 2010. Correcting for the influence of credit default, prepayment, and funding risks, I find that the increase in concentration of firms had a negative impact on competition in the Dutch mortgage market. I also find indications that the regulatory pricing constraints imposed by the European Commission negatively influenced competition.