Measuring Competition using the Boone Relative Profit Difference Indicator: an application to Banking Systems in Emerging Economies

This paper suggests an operational method for implementing the theoretical relative prot dierence test for intensity of competition due to Boone (2008). We use polynomial quantile regressions for which integral areas and their standard errors can easily be computed and compared using Wald tests. An empirical example is presented which applies the test to a panel data sample of banks in dierent emerging economies. The results indicate that the trend towards more intense competition amongst emerging economy banks continued during the period of the nancial upheaval in 2005-2008, and that India and China among others were leading this process.