scholarly journals Estimation of the competitive conditions in the Czech banking sector

2011 ◽  
Vol 59 (2) ◽  
pp. 299-306 ◽  
Author(s):  
Daniel Stavárek ◽  
Iveta Řepková
Keyword(s):  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
Necessary Condition ◽  
Banking Competition ◽  
The Czech Republic ◽  
Full Sample ◽  
Empirical Industrial Organization ◽  
Banking Market ◽  
Competition Level

The paper uses New Empirical Industrial Organization approach, especially Panzar-Rosse model to estimates the level of competition of the banking industry in the Czech Republic during the period 2001–2009. We apply Panzar-Rosse model to estimate H statistic for a panel of 15 banks, which represent almost 90 % of the market. This paper also measures and compares the degree of banking competition in two sub-periods, 2001–2005 and 2005–2009, in order to investigate development of the competitive structure of the Czech banking industry. We found that the market was in equilibrium during most of the estimation period, which is a necessary condition for sound evaluation of the competition level. While the market can be described as perfectly competitive in 2001–2005, the intensity of competition decreased after joining the EU in 2004 and the market can be characterized as one of monopolistic competition in 2005–2009. The monopolistic competition in the Czech banking market was also revealed if the full sample 2001–2009 is considered.

scholarly journals Innovative approaches to the assessment of banking competition in ukraine in terms of digital transformation

2021 ◽  
pp. 181-195
Author(s):  
Ganna Karcheva ◽  
Natalia Shvets ◽  
Karina Dalgic ◽  
Nataliya Dalevska
Keyword(s):  
Banking Sector ◽  
Banking Industry ◽  
Banking System ◽  
Digital Transformation ◽  
Comprehensive Assessment ◽  
Banking Competition ◽  
Banking Market ◽  
Competition Level ◽  
Structural Methods ◽  
Innovative Approaches

The article considers the issues on banking competition interaction, the banking system's stability and efficiency. This research aims to conduct a comprehensive assessment of the banking competition that consists of structural and non-structural methods under the institutional changes' impact. The paper presents how this influences the banking system of Ukraine through its reformation in the banking competition level and how it interacts with indicators of stability and efficiency of the banks. In this study's frame, the authors applied a developed approach to the modified model of Panzar-Rosse regarding the banking activity in Ukraine after it has been rebooted and «cleansed of». The systematization of the scientific background and approaches to assessing the level of banking competition in Ukraine noted that, generally, native authors used only one of the methods to assess the level of competition in the banking industry of Ukraine. Besides, their studies focused on the pre-crisis period, when these innovations hadn't significantly affected the banks' activity changes. The importance of solving this scientific problem is identifying problems in the banking system and taking measures to eliminate them, using the comprehensive assessment of the banking competition level, considering the explanatory indicators of the banks' stability. This issue became critical after a significant reduction in the number of banking institutions in Ukraine and the change in the institutional structure of the banking system of Ukraine under the influence of financial innovations. The study into assessing the level of competition in the banking market of Ukraine is carried out in the following logical sequence: 1) considering the studies on the given subject; 2) describing the existing methods for assessing competition in the banking industry; 3) describing the proposed modified methods of the assessing the level of banking competition; 4) providing proposals regarding the improving banking competition in Ukraine. The study's period is 2015-2019. The research object is the banking system of Ukraine. The article presents an empirical analysis of the current level of competition in the banking market of Ukraine. The findings showed that the banking sector of Ukraine is characterized by monopolistic competition, which is characterized by increasing concentration in the market of the state-owned banks. The study empirically confirms and theoretically proves that some Ukrainian banks have increased their market share due to a decrease in the number of banks in recent years due to the influence of digital transformation. The results of this study could be beneficial for the use of proposed innovative approaches to assessing the level of banking competition in Ukraine in the future, for the bank owners (including small ones), also on proposals for the perspective development of neo-banks in Ukraine, in which there is a need not only for the banking system but also for the users of banking services.

scholarly journals Banking Competition Measurement and Banking Sector Performance: Analysis of 4 ASEAN Countries

2017 ◽  
Vol 6 (1) ◽  
pp. 1-28
Author(s):  
Buddi Wibowo
Keyword(s):  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Competition ◽  
Banking Efficiency ◽  
Lerner Index ◽  
Industry Competition ◽  
Competition Level ◽  
Sector Performance ◽  
Asean Countries ◽  
Low Efficiency

Many believe concentrated  banking industry which is dominated by few  big banks creates lower  competition, high profitability, and low efficiency. The main issue in empirical testing of this hypothesis is how to measure banking competition level. Traditional measures of competition are  concentration ratio and Herfindahl-Hirschman Index. This study uses three measures of banking level competition which are widely used in recent  financial literature: Boone Indicator, Lerner Index and H-Panzar-Rosse  statistics.  Lerner Index and H-Panzar-Rosse statistics resulted a similar competition level conclusion, while Boone Indicator produced slightly different output. Industry concentration produced opposing results with those three level of industry competition measurement methods. The results show  banking competition tend to be a monopolistic competition in ASEAN countries, especially in Indonesia which banks’ strategy basically were non-pricing strategy. Competition significantly caused lower profitability, while banking efficiency was not significantly affected by level of competition.DOI:  10.15408/sjie.v6i1.4547

scholarly journals Relationship between competition and efficiency in the Czech banking industry

2013 ◽  
Vol 61 (7) ◽  
pp. 2701-2707 ◽  
Author(s):  
Iveta Řepková ◽  
Daniel Stavárek
Keyword(s):  
Positive Relationship ◽  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
Empirical Literature ◽  
Data Envelopment ◽  
Reverse Effect ◽  
Banking Competition ◽  
Johansen Cointegration Test ◽  
The Relationship

The aim of the paper is to estimate the relationship between competition and efficiency in the Czech banking industry in the period 2001–2010. The theoretical definition and literature review of the relationship between banking competition and efficiency is included. Lerner index and Data Envelopment Analysis were used to estimate the degree of competition and efficiency in the Czech banking sector. The market structure of the Czech banking industry was estimated as a monopolistic competition and it was found a slight increase in the competition in the banking sector. The efficiency of the Czech banks increased in the analysed period. Using a Johansen cointegration test, the paper contributes to the empirical literature, testing not only the causality running from competition to efficiency, but also the reverse effect running from efficiency to competition. The positive relationship between competition and efficiency was estimated in the Czech banking sector. These findings are in line with the Quiet Life Hypothesis and the suggestions that the increase of the competition will contribute to efficiency.

scholarly journals The Degree of Competition in the UAE Banking Industry

2017 ◽  
Vol 4 (2) ◽  
pp. 1
Author(s):  
George Owusu Antwi ◽  
Rachna Banerjee ◽  
Amal Abeer Mohammed ◽  
Mariam Juma Muna-Habib
Keyword(s):  
Market Structure ◽  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
Balance Sheet ◽  
Competitive Environment ◽  
Input Price ◽  
Financial Products ◽  
Long Run ◽  
Banking Market

This paper has made an attempt to assess the degree of competition (or market structure) in the UAE banking sector using the H-statistics established by Panzar-Rosse (1987). Data of six years (2009-2015) have been extracted from various balance sheet and income statements of the banks. Pooled OSL estimator was used to obtain the coefficient. The inputs prices were found to be significant except the input price of labor. Total asset was registered to be positively significant. All other variables were not significant. The results of the study reveal that the UAE banking market structure is characterized by the monopolistic competition. That is, banks earned their revenue as if operating under conditions of monopolistic competition during this period. A robust check was performed to test for validity of PR-model. The results yield E-statistic which is consistent with long-run equilibrium. It is believed that both the small and the larger banks operate relatively equal more in a competitive environment. We recommend that UAE should develop new financial products and services that will provide convenience to customers while improving profitability.

scholarly journals MODERN APPROACHES FOR ASSESSING THE COMPETITION LEVEL IN BANKING MARKET

2019 ◽  
pp. 70-76
Author(s):  
Nadiia Hryhorivna Vyadrova ◽  
◽  
Keyword(s):  
Banking Sector ◽  
Methodological Approach ◽  
Banking Competition ◽  
Strategic Development ◽  
Target Setting ◽  
Banking Market ◽  
Competition Level ◽  
The Cost ◽  
The Impact ◽  
The Relationship

Urgency of the research. The impact of competition on the cost of banking services, availability of financial resources, efficiency and speed of transformation of savings into investments determines the relevance and timeliness of developing an appropriate methodological approach, which involves calculating Herfindahl-Hirschman index (HHI) to determine the competitive structure of the Ukrainian banking market. Target setting. Assessing the level of competition is the basis for establishing the relationship between the financial performance of banking and the competitiveness level of the bank and determine its ability to respond quickly to changes in market conditions. Actual scientific researches and issues analysis shows the importance of in-depth diagnosis of the level of banking competition to address the strategic development of banks. Uninvestigated parts of general matters defining. The issues of assessing the level of competition in key segments of the banking market remain insufficiently researched. The research objective. A study of modern aspects of competition in the banking market and improvement of the methodological approach to assessing the competitiveness of banks using the Herfindahl-Hirschman Index (ННІ) The statement of basic materials. The proposed methodological approach involves the consistent implementation of the following procedures: assessing the level of penetration of the banking sector into the economy; determining the conditions of a competitive market; assessment of the concentration level using the Herfindahl-Hirschman Index. Conclusions. Approbation of this approach allowed to confirm the thesis of increasing the level of oligopolization of the industry. The results of the calculation of the Herfindahl-Hirschman Index, which takes into account the situation in the industry as a whole, and not only among market leaders, allows us to draw conclusions about the growing oligopolization of the banking market.

scholarly journals Microeconomic and Macroeconomic Effects of the Banking Sector Development Policy in Russia

2020 ◽  
Vol 15 (4) ◽  
pp. 30-61
Keyword(s):  
Banking Sector ◽  
Banking Industry ◽  
Banking System ◽  
Banking Supervision ◽  
Negative Effects ◽  
Banking Competition ◽  
Public Sector Banks ◽  
Competition Level ◽  
The Impact ◽  
Structural Methods

This article studies the impact of banking supervision on the Russian banking sector structure. The article also discusses the main challenges facing the banking system and the macroeconomic role of the Bank of Russia’s supervisory policy. Taking into account some features of the national banking sector, the author justifies the current strict banking supervision despite all possible short- and longterm negative effects of this policy. For example, static and dynamic estimates of the competition level in the Russian banking sector, which were obtained using structural and non-structural methods, show a low competition level. A noncompetitive banking industry increases costs in the economy and exacerbates existing imbalances. For this reason, the paper considers key measures that contribute to the development of banking competition. The article emphasizes the great importance of the goals of building a full three-tier banking system and privatization of public sector banks. However, strict banking supervision and consolidation of the banking industry have reduced the impact of negative factors on the supply of loans and increased the Russian banking sector’s sustainability. These positive changes and macroeconomic reform provide the basis for stable economic growth. The main results obtained can be used by national authorities to develop the Russian banking system.

scholarly journals Competition and Concentration in Bangladeshi Banking Sector

2016 ◽  
Vol 5 (1) ◽  
pp. 16-29
Author(s):  
Anwar Hossain Repon ◽  
Zahidul Islam
Keyword(s):  
Market Structure ◽  
Concentration Ratio ◽  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
Market Concentration ◽  
Sample Period ◽  
Banking Competition ◽  
The Past ◽  
Bank Concentration

The purpose of this paper is to investigate the market structure and degree of concentration of Bangladeshi banking industry. The study measured market concentration by using widely recognized measures like k-bank concentration ratio and Herfindahl-Hirchman Index (HHI). It evaluates market structure by applying Panzar-Rosse Model over 8 years period from 2006 to 2013. The result of concentration measures indicates a decreasing trend and low level of market concentration in Bangladeshi banking industry over the sample period. The panzer-Rosse “H-Statistic” suggests that banks in Bangladesh are operating under monopolistic competition. Present paper contributes to a burgeoning literature on banking competition that has evolved significantly over the past periods on a developing country perspective like Bangladesh.

Whither competition in Malaysia’s banking industry ex post a restructuring

2018 ◽  
Vol 45 (2) ◽  
pp. 263-282 ◽  
Author(s):  
Tinfah Chung ◽  
Ariff Mohd
Keyword(s):  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
Banking System ◽  
Banking Competition ◽  
Data Set ◽  
Middle Income ◽  
Content Type ◽  
Documentary Analysis ◽  
Ex Post

Purpose The purpose of this paper is to report how banking competition has fared ex post a major consolidation exercise completed during 2002-2004, which led to a complete restructuring of the sector in Malaysia. Nothing is known about the competitiveness of banking system ex post a major consolidation of banks in any country including Malaysia, a middle-income economy. Design/methodology/approach The authors apply two models, the Panzar and Rosse (1997) and the Lerner index (1934). The two competitiveness measures are quite refined, well received by researchers, but has yet been applied to measure banking sector competitiveness of a middle-income country to characterize post-merger behavior using post-global-crisis data set. The data were complemented by documentary analysis, including brand documents, descriptions of internal processes and copies of employee magazine articles. Findings The results indicate that, after 11 years of consolidation, the banking sector is not operating under perfect or monopolistic competition. Malaysia’s banking industry continues to benefit the charter holders at increasingly lower level because a cartel-like environment still provides trade-off of competition costs before 2002/2004 with the costs from a cartel-like industry structures now. There is only a weak evidence that, in recent years, the banking sector is moving toward more competition. Research limitations/implications The chosen area of research is to test the response of the banking sector ex post consolidation after a crisis. It enables researcher to compare results with those of other countries and may not be generalizable. Practical implications The findings reported in this study using corroborating measures for the first time, appear to suggest increasing concentration from consolidation may lead to the undesirable cartel-like industry structure where the exercise of market power in the name of stability may not be welfare promoting. Originality/value This paper fulfills an identified need to study how the banking sector has performed ex post consolidation after a crisis.

scholarly journals Banking Competition and Efficiency: Empirical Analysis on the Bosnia and Herzegovina Using Panzar-Rosse Model

2015 ◽  
Vol 6 (1) ◽  
pp. 72-92 ◽  
Author(s):  
Deni Memić
Keyword(s):  
Market Structure ◽  
Bosnia And Herzegovina ◽  
Banking Sector ◽  
Monopolistic Competition ◽  
Scientific Literature ◽  
Monopoly Power ◽  
Banking Competition ◽  
Banking Market ◽  
Bank Concentration

Abstract Background: Competition in the banking industry has been an important topic in the scientific literature as researchers tried to assess the level of competition in the banking sector. Objectives: This paper has an aim to investigate the market structure and a long term equilibrium of the banking market in Bosnia and Herzegovina nationwide as well as on its constitutional entities as well as to evaluate the monopoly power of banks during the years 2008-2012. Methods/Approach: The paper is examining the market structure using the most frequently applied measures of concentration k-bank concentration ratio (CRk) and Herfindahl-Hirschman Index (HHI) as well as evaluating the monopoly power of banks by employing Panzar-Rosse “H-statistic”. Results: The empirical results using CRk and HHI show that Bosnia and Herzegovina banking market has a moderately concentrated market with a concentration decreasing trend. The Panzar-Rosse “H-statistic” suggests that banks in Bosnia and Herzegovina operate under monopoly or monopolistic competition depending on the market segment. Conclusions: Banks operating on the banking market in Bosnia and Herzegovina seem to be earning their total and interest revenues under monopoly or perfectly collusive oligopoly.

scholarly journals Competition in the Banking Sector in the Czech Republic

2010 ◽  
Author(s):  
Daniel Stavarek ◽  
Iveta Rapkova
Keyword(s):  
Czech Republic ◽  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
The Czech Republic ◽  
Dynamic Development ◽  
Intensity Of Competition ◽  
The Eu

The paper estimates the level of competition of the banking industry in the Czech Republic during the period 2000-2008. We apply Panzar-Rosse model on data from banks comprising almost 90% of the market. We found that the market was alternately in equilibrium and disequilibrium, which demonstrates a dynamic development of the Czech banking sector. While the market can be described as perfectly competitive during the period 2000-2004, the intensity of competition decreased after joining the EU in 2004 and the market can be characterized as one of monopolistic competition in 2004-2008.

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