Size, efficiency, market power, and economies of scale in the African banking sector

The article analyzes the practical aspects of the functioning of some barriers to entry in the era of digital transformation of industry markets. It is noted that under the influence of digitalization processes, both positive changes in the mechanism of market operation are recorded, as well as a number of negative circumstances that have become a serious challenge for antitrust agencies. Control of big data, initial investment in digital infrastructure, and broad technological capabilities of digital blocking of users, against the background of powerful network effects and pronounced economies of scale, carry the potential for significant growth in the market power of individual firms. The article substantiates that such trends theoretically pose a significant threat to competition, and can form new types of entry barriers. At the same time, practical arguments are presented that indicate the ambiguity of this position.

Download Full-text

Does Market Power Affect Banking Dividend Policy? Evidence from Nepal

International Journal of Business, Technology and Organizational Behavior (IJBTOB) ◽

10.52218/ijbtob.v1i4.110 ◽

2021 ◽

Vol 1 (4) ◽

pp. 297-306

Author(s):

Sahadev Bhatt

Keyword(s):

Market Power ◽

Banking Sector ◽

Market Competition ◽

Influencing Factor ◽

Commercial Banking ◽

Agency Conflicts ◽

Dividend Payment ◽

Lerner Index ◽

Asset Growth ◽

Structural Measure

We attempt to explain how market power impacts bank dividend payment behaviors in Nepal by taking the sample from the commercial banking sector employing a panel data regression model. Using the Lerner Index (LI), a non-structural measure of market power or lack of competition, we found that market power inversely but statistically insignificantly affect dividend payment. This finding leads us to conclude that market power-a proxy of more or less competition is not an important and influencing factor to the dividend decisions in commercial banking sectors signifying that competition does not seem helpful in mitigating agency conflicts. It is also concluded that banking dividend payouts are not the result of the punitive influence of product market antagonism. Further, among other firm-specific determinants, bank size and leverage significantly positively whereas asset growth significantly negatively affect the dividend decision. However, profitability is found insignificant determinant of dividend payment. The paper enriches and contributes to the literature on banking dividend payout and helps to identify the key factors that affect banking dividend decision-making. Keywords : Banks, Market competition, Market power, Lerner Index, Nepal

Download Full-text

The Banking Sector: Economies of Scale Afoot

SSRN Electronic Journal ◽

10.2139/ssrn.2707640 ◽

2015 ◽

Author(s):

Michael Khromov

Keyword(s):

Economies Of Scale ◽

Banking Sector

Download Full-text

Are Multinational Retailers Really Selling at Lower Prices Than Domestic Chains? Evidence from Three Sectors

Margin The Journal of Applied Economic Research ◽

10.1177/0973801018800082 ◽

2018 ◽

Vol 13 (1) ◽

pp. 49-82

Author(s):

José Caraballo-Cueto

Keyword(s):

Market Power ◽

Economies Of Scale ◽

Short Term ◽

Jel Codes ◽

The World ◽

Loss Leader ◽

Representative Samples

Currently, there is no systematic evidence showing that, 15 years or more after entry, all multinational retailers provide lower prices than domestic buying groups. In the short term, some multinational retailers may lower prices to deter local competitors and attract consumers in a ‘loss leader’ strategy. However, domestic competitors can integrate buying groups to share the benefit of economies of scale with multinational retailers, while holding lower profitability requirements and overhead costs than multinational retailers. We compared multinational retailers to domestic buying groups in a jurisdiction that had one of the highest proportions of Walgreens and Walmart stores in the world. Despite their market power, in our representative samples of goods, there is no evidence that the prices of multinational retailers in the sectors of pharmacies, supermarkets and hardware stores are lower than domestic chains. JEL Codes: M3, R1, L8, F2

Download Full-text

Research on market power and market structure

International Journal of Crowd Science ◽

10.1108/ijcs-08-2017-0009 ◽

2017 ◽

Vol 1 (3) ◽

pp. 210-222 ◽

Cited By ~ 1

Author(s):

Baowen Sun ◽

Wenjun Jing ◽

Xuankai Zhao ◽

Yi He

Keyword(s):

Market Power ◽

Economies Of Scale ◽

Scale Economy ◽

The Internet ◽

Content Type ◽

Internet Industry ◽

Empirical Industrial Organization ◽

Welfare Change ◽

Internet Platform ◽

Traditional Industry

Purpose This paper aims to clear whether the monopoly structure of the internet industry has produced market power and discussed the welfare change of the internet industry monopoly. Design/methodology/approach By using new empirical industrial organization methods and taking the e-commerce market as an example, the authors measured market power and economies of scale of the internet platform companies. Findings Internet platform enterprises have formed scale economy, but it has not had market power, and the industry still maintains high levels of competition; also, the emergence of large enterprises may increase the welfare of consumers. Originality/value The conclusion of this paper clarified actual competition status of internet industry and provided a new foothold for regulation and ideas for the traditional industry to crack the Marshall Conflict.

Download Full-text

Banking Sector Performance in Latin America: Market Power versus Efficiency

Review of Development Economics ◽

10.1111/j.1467-9361.2011.00610.x ◽

2011 ◽

Vol 15 (2) ◽

pp. 307-325 ◽

Cited By ~ 47

Author(s):

Georgios E. Chortareas ◽

Jesus G. Garza-Garcia ◽

Claudia Girardone

Keyword(s):

Latin America ◽

Market Power ◽

Banking Sector ◽

Sector Performance

Download Full-text

COMPETITION-STABILITY RELATIONSHIP IN DUAL BANKING SYSTEMS: EVIDENCE FROM EFFICIENCY-ADJUSTED MARKET POWER

The Singapore Economic Review ◽

10.1142/s0217590820420096 ◽

2021 ◽

pp. 1-24

Author(s):

MUDEER AHMED KHATTAK ◽

OMAR ALAEDDIN ◽

MOUTAZ ABOJEIB

Keyword(s):

Market Power ◽

Financial Stability ◽

Banking Sector ◽

Market Competition ◽

Policy Implications ◽

Islamic Banks ◽

Banking Competition ◽

Precise Measure ◽

Conventional Banks ◽

The Impact

This research attempts to explore the impact of banking competition on financial stability employing a more precise measure of market power. It was found that Islamic banks are less stable and are enjoying lower market power. The analysis shows that higher market competition makes the banking sector vulnerable to defaults, supporting the “competition-fragility view”. This research finds no difference in the relationship for Islamic banks indicates that Islamic banks might be involved in traditional banking activities as conventional banks. The results are consistent and robust to different estimation approaches and subsamples. This research carries regulatory and policy implications.

Download Full-text

Bank-Specific and Macroeconomic Determinants of Profitability: A Revisit of Pakistani Banking Sector under Dynamic Panel Data Approach

International Journal of Financial Studies ◽

10.3390/ijfs8030042 ◽

2020 ◽

Vol 8 (3) ◽

pp. 42 ◽

Cited By ~ 1

Author(s):

Habib-ur Rahman ◽

Muhammad Waqas Yousaf ◽

Nageena Tabassum

Keyword(s):

Panel Data ◽

Interest Rates ◽

Economies Of Scale ◽

Banking Sector ◽

Unobserved Heterogeneity ◽

Dynamic Panel Data ◽

Capital Adequacy ◽

Bank Failures ◽

Dynamic Panel ◽

Macroeconomic Determinants

This study aims to examine the effect of the bank-specific and macroeconomic determinants of profitability for the banking sector of Pakistan. To incorporate the issues of endogeneity, unobserved heterogeneity, and profit persistence, we apply a generalised method of moments (GMM) technique under the Arellano–Bond framework to a panel of Pakistani banks that covers the period 2003–2017. The results of a dynamic panel data approach reveal that capital adequacy accelerates the profitability of the banking sector in Pakistan. Capital adequacy helps the financial system to absorb any negative shock by reducing the number of bank failures and losses. Conversely, our empirical investigation reveals that the liquidity ratio, business mix indicators, interest rates, and industrial production deteriorates the bank profitability. Liquidity risks enhance the probability of default risks and transmit into the unpaid loans and hence the lower return. Our empirical evidence further reveals that Pakistani banks are not getting any benefit of the economies of scale in terms of financial performance.

Download Full-text

Bank Competition, Efficiency, and Stability in Macau

Accounting and Finance Research ◽

10.5430/afr.v8n4p157 ◽

2019 ◽

Vol 8 (4) ◽

pp. 157

Author(s):

Harry Xia ◽

Kevin Lei ◽

Jiaochen Liang

Keyword(s):

Economies Of Scale ◽

Banking Sector ◽

Banking System ◽

Bank Loans ◽

Bank Competition ◽

Income Volatility ◽

Bank Efficiency ◽

Insolvency Risk ◽

Relationship Of ◽

The Relationship

Macau has the uppermost population density and the fourth-highest GDP per capita in the world. Macau’s banking system is regarded as one of the most important indicators of Macau’s macroeconomic growth and stability during its transformation into a wealthy and modern metropolis. In this study, we use a sample of 26 banks to explore the relationship of bank competition, efficiency and stability in Macau from its return to China in 1999 to 2016. Our results demonstrate that bank competition does cause efficiency in Macau throughout the study period. We also find indications of a positive but not significant connection between bank market power and bank fragility including income volatility and insolvency risk. Moreover, this study finds no evidence that the size of operations proxied by total bank loans and total assets would impact bank efficiency, indicating that economies of scale or bank market share don’t necessarily bring about efficiency in Macau. Our evidence contributes to the literature by being the first to thoroughly examine the relation of bank competition, efficiency and stability in Macau. The findings provide meaningful implications to the practitioners and policymakers to make sound decisions accordingly, especially to closely monitor and maintain a proper level of competition in Macau’s banking sector.

Download Full-text