There are different approaches to measuring market concentration. In this study, two different methodologies were combined. Firstly, an analysis was undertaken to identify the different market concentration ratios (CR) levels. The concept of concentration ratios is used extensively by the German Federal Cartel Office and other authorities. The concentration ratio CR n is defined as the market share of the n largest undertakings competing in the market.
The rise of the commercial paper market, which resumed following the demise of the Penn Central Railroad in the early 1970s, followed by the growth of the junk bond market in the 1980s and 1990s, has seemingly reduced the role of banks in providing financing to large businesses (Mishkin and Strahan, 1998). This much-remarked-upon evolution away from banks and toward the securities markets, though, has not rendered banks irrelevant (Boyd and Gertler, 1994). While they do provide less funding than before, banks remain important, even for large firms, as the “liquidity provider of last resort.” This liquidity insurance role is notable in the commercial paper market, where issuers invariably secure a backup line of credit from their bank as protection against market pullbacks. Banks have also traditionally provided liquidity insurance in the form of loan commitments to many classes of borrowers. In the case of the commercial paper backup lines, these contracts allow firms to borrow (or “take down”) up to a pre-determined amount of funds at a fixed spread over a safe market benchmark interest rate such as LIBOR. This liquidity insurance softens the blow of reduced liquidity, where liquidity can be defined as the firm’s ability to access the capital markets at attractive (fair) prices.
Why do commercial banks, as opposed to some other kind of financial institutions, provide this liquidity insurance? In this paper, we argue that banks can provide firms insurance against market-wide liquidity shocks at lower cost than other financial intermediaries because deposit inflows provide a hedge for loan demand shocks. Figure 1 illustrates our main argument graphically. During normal times (high liquidity), funds flow directly from investors to firms (broken line in Figure 1). Because banks are viewed as a safe haven by investors, funding tends to become available to them during periods of market stress (low liquidity), just when borrowers want to draw funds from their loan commitments. Hence, the funding flows within a bank complement each other, with deposit inflows serving as a hedge for outflows from loan commitment take-downs (solid lines in Figure 1). Because of this hedge, banks can offer the lowest-cost insurance against a systematic shock to liquidity. The banks’ ability to sell liquidity insurance more cheaply than other financial institutions provides an explanation for the viability of their business in this particular market.
The stopping cross sections of several substances were measured for protons in the energy range 50 to 600 kev. The substances investigated were lithium, beryllium, copper, gold, lead, lithium fluoride and calcium fluoride.
