Competition and Welfare in the Peruvian Deposits Market: A Structural demand approachAlvaro Conteras Mellado

Abstract:

I estimate a structural demand model for deposit services in the Peruvian Banking sector in order to determine key demand variables and measure the welfare effects of monopolistic competition in the decade after the financial crisis (2009-2019), period in which the number of total banks stayed almost the same but the concentration level fell. The demand estimation is performed by using a discrete choice model (multinomial logit and nested logit) based on deposit interest rates and bank's characteristics as in [Egan et al., 2017] and [Dick, 2008], using the methodology based on [Berry, 1994]. I  find that demand for deposits is inelastic to both savings deposit interest rates and time deposit interest rates. Similar to the related literature, I find that consumers value several bank characteristics such as geographical attributes (branches and ATM presence), number of employees per branch and bank's age. Also, there is certain evidence that consumers value measures related to  financial health of the bank. Additionally, I perform a welfare analysis and estimate that the consumers experienced positive welfare effects during the last decade, especially in regions which had a higher market concentration at the beginning of the period.

Speaker:

Economista egresado de la UP y estudiante del PhD en Economía de la Universidad de Boston. Antes de iniciar sus estudios de doctorado, completó la MECO en la UP y posteriormente el MSc en Economía en LSE. En su experiencia profesional, Alvaro ha trabajado en el área de Estudios Económicos de APOYO Consultoría (2015-2019) y en la Dir. Gen. del Tesoro Público en el MEF (2020-2021).