Measuring competition using the Boone relative profit difference indicator

• Competition test (Boone) relates normalised profitability to normalised efficiency.
• The paper suggests an operational statistical test to implement this idea.
• Use pooled sample of firms covering different periods to cluster the observations.
• Estimated by polynomial quantile regression with Wald test.
• The test is used with a pooled sample of banking systems in emerging economies.

This paper suggests a method for implementing the theoretical relative profit difference test for intensity of competition due to Boone (2008). An empirical illustration is given for banking systems in emerging economies