We have argued above that for the majority of German banks the relevant market is
indeed the county the bank is headquartered in. However, although a German savings
bank normally does not run branches outside its county of domicile, there is nothing
stopping a customer or depositor from choosing a bank outside the respective county.
Ignoring this manifestation of bank competition would surely make our approach into
the competition-bank risk nexus unreliable. The Boone indicator measured at the federal
state level captures exactly this characteristic of bank market competition.9