ENJOYING THE QUIET LIFE UNDER DEREGULATION? EVIDENCE FROM ADJUSTED LERNER INDICES FOR U.S. BANKS Academic Article

abstract

• The quiet life hypothesis posits that firms with market power incur inefficiencies rather than reap monopolistic rents. We propose a simple adjustment to Lerner indices to account for the possibility of forgone rents to test this hypothesis. For a large sample of U.S. commercial banks, we find that adjusted Lerner indices are significantly larger than conventional Lerner indices and trending upward over time. Instrumental variable regressions reject the quiet life hypothesis for cost inefficiencies. However, Lerner indices adjusted for profit inefficiencies reveal a quiet life among U.S. banks. 2012 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

authors

• Kolari, James

published proceedings

• REVIEW OF ECONOMICS AND STATISTICS

altmetric score

• 15

author list (cited authors)

• Koetter, M., Kolari, J. W., & Spierdijk, L.

citation count

• 309

complete list of authors

• Koetter, Michael||Kolari, James W||Spierdijk, Laura

publication date

• May 2012

publisher

• MIT Press  Publisher

published in

• Review of Economics and Statistics  Journal

keywords

• 35 Commerce, Management, Tourism And Services
• 3502 Banking, Finance And Investment
• 38 Economics
• 3801 Applied Economics

Digital Object Identifier (DOI)

• 10.1162/REST_a_00155

start page

• 462

end page

• 480

volume

• 94

issue

• 2

URL

• http%3A%2F%2Fdx.doi.org%2F10.1162%2Frest_a_00155