Measuring competition in Portuguese commercial banking during the Golden Age (1960–1973)

The institutional environment of Portuguese banking during the Golden Age of economic growth (1950–1973) has been criticised in many accounts. According to various authors, on the one hand it would have granted excessive protection to existing banks, allowing them to obtain high rents, a disincentive for them to compete; on the other, it would have forced them to concentrate their activity excessively on short-term credit instruments, thereby preventing them from contributing effectively to finance growth. In this article we use a formal statistical approach of the Panzar–Rosse type and conclude that the system did, in fact, have some interesting competitive features.