The main contribution of this paper is that it applies a new measure for competition, called the Boone indicator (see also Boone, 2001; Bikker and Van Leuvensteijn, 2008; Van Leuvensteijn et al., 2007). The basic notion underlying this indicator is that in a competitive market, more efficient companies are likely to gain market shares. Hence, the stronger the impact of efficiency on market shares is, the stronger is competition. Further, by analyzing how this efficiency-market share relationship changes over time, this approach provides a measure which can be employed to assess how changes in competition affect the cost of borrowing.
