In this paper we present a general approach and methodology for modelling concentration dynamics on industrial level. The majority of research in this field has usually been focused on estimating adjustment models, where the speed of adjustment of actual level of concentration to the long-run...

We test a sample of 3,586 banks from 33 European countries to determine whether performances above or below a social aspiration level (median performance of peer banks) influence banks' aggregate risk levels. Our results are consistent with the behavioral theory of the firm and prospect theory...