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 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.

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 Degree of Concentration of the Banking Sector in B&H and the Impact on the Prices of Banking Products

2020 ◽  
Vol 58 (2) ◽  
pp. 219-234
Author(s):  
Milica Bojat ◽  
Mladen Rebić
Keyword(s):  
Market Structure ◽  
Banking Sector ◽  
Monopolistic Competition ◽  
Consumer Surplus ◽  
Marginal Costs ◽  
Banking Market ◽  
Lower Volume ◽  
Key Indicators ◽  
The Impact ◽  
Insight Into

AbstractThis paper tends to examine the level of concentration of the banking sector in Bosnia and Herzegovina. The main objective of the paper is to measure the level of concentration and to investigate how the concentration and type of market structure affect the prices of banking products. By monitoring the movement of key indicators, it provides an insight into the state of the B&H banking sector. By using the appropriate index (HHI, CR3), the movement of concentration levels and the shape of the market structure that prevailed in the banking market over a period of time were determined. The results show that there is a moderate concentration in the B&H banking sector, which includes monopolistic competition as a form of market structure. This means that the equilibrium level of production is achieved at a lower volume of production, at higher prices for banking products (above marginal costs), thereby reducing consumer surplus relative to a perfectly competitive market

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 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 Competition in the Indian Banking Sector: A Panel Data Approach

2019 ◽  
Vol 12 (3) ◽  
pp. 136 ◽  
Author(s):  
Zhiheng Li ◽  
Shuangzhe Liu ◽  
Fanda Meng ◽  
Milind Sathye
Keyword(s):  
Public Sector ◽  
Panel Data ◽  
Foreign Investment ◽  
Banking Sector ◽  
Monopolistic Competition ◽  
Indian Government ◽  
Banking Market ◽  
Bank Ownership ◽  
Policy Measures ◽  
Privately Owned

The paper aims to assess the level of competition in the Indian banking sector overall as well as within the three groups of banks: foreign owned, state owned (public sector), and privately owned. We use panel data for the period from 2005–2018. We found that the overall competition in the Indian banking sector is strong, although there are differences by type of bank ownership. The Indian banking market continues to be characterized by monopolistic competition. The various policy measures taken by the Indian government in recent years appear to have helped boost competition. A policy suggestion would be to further liberalize the banking sector for foreign investment.

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 Structure, market power, and profitability: evidence from the banking sector in Latin America

2021 ◽  
Vol 32 (85) ◽  
pp. 126-142
Author(s):  
Cristiano Hordones ◽  
Antonio Zoratto Sanvicente
Keyword(s):  
Latin America ◽  
Interest Rates ◽  
Market Structure ◽  
Market Power ◽  
Banking Sector ◽  
Banking Industry ◽  
Scientific Basis ◽  
Performance Model ◽  
Panel Data Regression ◽  
Banking Market

ABSTRACT The aim of this paper is to evaluate the influence of market structure on the competition between banks and to determine whether competition affects their profitability in different countries in Latin America. The study also seeks to compare, between 16 countries in the continent, the levels of concentration, competition, and profitability of the respective banking sectors. This article fills the research gap regarding the structure and market power of banks in emerging countries, by comparing Brazil with the other countries in the continent. The topic is extremely important at a time of debate about the high interest rates in Brazil, the market structure observed, and the alleged effect of this on the high levels of spread between lending and borrowing rates. The research provides evidence for the debate regarding the structure of the banking industry. To evaluate competition, the Panzar-Rosse model was used. Concentration was measured by the Herfindahl-Hirschman index and CR5 ratio. To verify the link between the variables, the hypotheses of the structure-conduct-performance model were tested, via a sample of 16 countries in Latin America, covering the period from 2011 to 2017, using panel data regression. This study, conducted for the banking industry in Latin America, rejected the premises of the structure-conduct-performance (SCP) model, which affirm that concentration reduces competition, causing higher profitability in the sector. In the comparison of the studied variables between the countries in the continent, Brazil presented the lowest competition index. The concentration and profitability assessments, in turn, presented results in line with the mean. The results of the research serve to elucidate the intense debate regarding the structure of the banking market. Moreover, they serve as a scientific basis for regulators’ actions, aiming to incentivize competition and reduce bank spread.

scholarly journals Analysis of Islamic Banking Market Structure in Indonesia with Panzar-Rosse Model Approach

2019 ◽  
Vol 2 (2) ◽  
pp. 122-133
Author(s):  
Kiki Hardiansyah Siregar ◽  
Ahmad Qarib ◽  
Dede Ruslan
Keyword(s):  
Panel Data ◽  
Market Structure ◽  
Banking Industry ◽  
Secondary Data ◽  
Islamic Banking ◽  
Analysis Model ◽  
Banking Market ◽  
Monopoly Market ◽  
Equilibrium Test

The purpose in this study is to determine and analyze the market structure of the Islamic banking industry in Indonesia according to the Panzar-Rosse model and the level of competition between Islamic banking industry in Indonesia. To find out the market structure of the islamic banking industry it must be analyzed the effect of EAR, NPF, BOPO, FAR, FS, PL, PFF, PCE on the performance of Islamic banking as measured by ROA. The data used to answer and achieve these objectives is used secondary data from Islamic banks in Indonesia which has the largest asset ratings for a period of 6 years using the selected panel data method on the basis of Tests. The analysis model related to market structure uses the Panzar-Rosse model by looking for the H-statistic value and identified the Islamic banking equilibrium test on the panel data model of the performance of bank  in Indonesia. This study found that the performance of Islamic banking measured by ROA simultaneously affected EAR, NPF, BOPO, FAR and FS and Panzar-Rosse approach will produce H-Stat value which is the sum of three main coefficients ofbanking inputs (labor, capital and funds). With H-Stat valued at 0.735 can be concludedthat the islamic banking industry in indonesia into the category of monopolistic market.The levels of the Islamic banking industry of Bank BNI, Bank BRI, Bank Panin and Bank Bukopin are monopolistic market while Bank Muamalat and Bank Mandiri are directed towards a joint monopoly market in the position of long-term equilibrium.

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.

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