Measures of competition and concentration in the banking industry a review of the literature

The ratio of deposit to total asset is highly significant in all the period which shows the importance of deposit in the banking industry.

Empirical research has shown that managerial compensation and perquisite consumption tend to rise with firm size. Here, we use the tetrapoly version of the model, that is, we have a total of four competitors. Furthermore, the SCP hypothesis posits that because of collusion and domination, firms earn higher profits in a concentrated market than in a competitive market.

From the empirical analysis of the study, it was observed that commercial banks in Nigeria showed evidence of monopolistic competition which corroborate the result obtained in the previous studies.

In respect of the other explanatory variables in the model, the ratio of equity to total asset r1 is positively related to the gross earnings Geta. Nevertheless, American apprehension about concentrations of financial power continued to prevail.

The elimination of interest rate ceilings, for example, should increase choice and competition, result in better and cheaper services for the customer, and increase the efficiency with which the economy allocates scarce funds. Also, it contributed the highest coefficient of the H-statistic with 0.

The Durbin Watson statistic is also close to 2, which show that there is no serial correlation among the variables. Competition and Concentration in Bangladeshi Banking Sector: See general information about how to correct material in RePEc.

Diamond, Douglas, and Philip Dybvig. Charles Kindleberger alternatively suggests that non-monetary forces lie at the root of the problem, but that it was the failure of the Credit-Anstalt bank in Austria that proximately forced a sudden withdrawal of credit from the New York money markets and, in domino fashion, a contraction of credit throughout the United States.

It could be observed from the tables that all the variables are stationary at levels. The Journal of Economic History 54 2: In this study, we consider only loan as our output variable which is measured in value terms.

Where public sector advantage justifies the need for regulation, government intervention may appear in the form of reserve requirements imposed on deposit-taking institutions for facilitating the conduct of monetary policy or in the various ways in which governments steer credit to those sectors deemed important for some greater social purpose.

GMM generally account for heteroskedasticity and serial correlation between exogenous variables and the disturbance term. But here are the surprising insights: Two additional factors are also important: Bank Runs, Liquidity, and Deposit Insurance. Notably, the legal separation of these activities was repealed in the United States with the Financial Services Modernization Act.

The R2 is very high with a value of 0. If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item.

This value is closer to zero than one 1. Results of Competition in the Banking Industry After the unit root test has been performed, and found out that our variables are stationary at levels, the model in equation 13 which is linear in its unknown parameters are then subjected to empirical investigation using panel data with fixed effects to account for any heterogeneity among the industry banks as well as to avoid specification problems.

The common effect specification has been chosen for our model because the firms operating in the industry are country specific and they are likely to share the same characteristics.

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. By issuing tradable claims bank deposits against itself, the bank can add a flexibility to the circulating media of exchange in a manner that enhances the performance of the payments system.

All other variables follow the trends observed in table 3. Various approaches have been used in performing panel unit root tests. In the past, banking organizations were not allowed to engage in securities activities except on a limited, case-by-case basis through their so-called Section 20 subsidiaries.

Martinez-Miera and Repullo propose a model to illustrate the effect of competition on bank risk-taking and find that two effects working in opposite directions generate an unclear net effect on risk-taking and that the intensities of these two effects vary with the level of competition [ 13 ].Financial Dependence, Banking Sector Competition, and Economic Growth Stijn Claessens World Bank and Luc Laeven* on industrial growth of banking system concentration, the development of trade finance, and the LITERATURE REVIEW AND METHODOLOGY.

Measuring Market Power as Competition Over Time Michael L. Marlow and George E.

Research Series Supervision (discontinued)

Wright Our estimation for the savings and loan industry suggests that continued application of Traditional Measures of Concentration and Market Structure. on bank’s net interest margins and profitability in the Tunisian banking industry for the period.

concentration is less beneficial to the Tunisian commercial banks than competition. Stock market development The Determinants of Bank Performance: Literature Review Studies on the determinants of bank’s interest margin and.

Although banking competition differs in important ways from competition in other industries, due to the importance of prudential issues and systemic risk, it will be useful to quickly review the evolution of the theory of industrial organiza.

Review of Literature banking industry, including Internet banking and electronic payments technology, as well as information exchanges such as credit bureaus which provide the inputs for credit. particular, we included the HHI values by state as measures of market concentration.

effects from failures of insurers may not be as consequential as in the banking industry, they 2.

Cross-Country Comparisons of Competition and Pricing Power in European Banking

Background and Literature Review that measures competition through concentration levels has shownthe link between concentration.

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Measures of competition and concentration in the banking industry a review of the literature
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