Bank Competition in India: Some New Evidence Using Risk-Adjusted Lerner Index Approach

Arrawatia, Rakesh; Misra, Arun; Dawar, Varun; Maitra, Debasish

doi:10.3390/risks7020044

Cited by 4 publications

(3 citation statements)

References 26 publications

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“…Like other emerging markets, Sinha and Sharma (2016) found that the Indian banking market is characterized by monopolistic competition. Arrawatia et al (2019) studied banking competition in India for the period 1996-2016 using the learner index approach and confirmed the monopolistic competitive conditions.…”

Section: Theory and Literature Reviewmentioning

confidence: 83%

Competition in the Indian Banking Sector: A Panel Data Approach

Liu

Meng

et al. 2019

JRFM

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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.

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Section: Theory and Literature Reviewmentioning

confidence: 83%

Competition in the Indian Banking Sector: A Panel Data Approach

Liu

Meng

et al. 2019

JRFM

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“…Some scientists argued that the traditional methods of estimating competition are data intensive and underestimate the competition (Brämer et al 2013;Gischer et al 2015, Arrawatia et al 2019. Because of this, the researchers proposed to simplify measures (Tsionas et al 2018) by focusing only on specific bank activities (Gischer et al 2015) and types of markets (Brämer et al 2013).…”

Section: New Approachesmentioning

confidence: 99%

Competitiveness in Banking Sector: A Systematic Literature Review

Begimkulov

2023

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THE AIMS OF THE PAPER The concept of bank competitiveness has attracted increasing scientific attention. The current paper explores the directions and trends of research on bank competitiveness measures by reviewing recently published journal articles. METHODOLOGY The research follows the systematic literature review method. First, a set of keywords were defined. Then, the keywords were combined with the Boolean operator “AND” to identify articles in the two biggest scientific databases: Web of Science and Scopus. The identified papers were filtered and screened following the PRISMA method of selection. At the final stage, 33 articles were included. MOST IMPORTANT RESULTS Based on the analysis of published papers, the author identified the main research streams within bank competitiveness:risk-stability, market power, macroeconomic context, information technology, and new applications. Also, within the context of growing digitalization, little attention is paid to the influence of information technology on bank competitiveness. RECOMMENDATIONS Within the context of the growing importance of technological innovations in the financial sector (e.g., financial technology startups), there is still a lack of research on the influence of technological innovations implemented by banks on their competitiveness. Also, considering that the existing methods of measuring competitiveness in banks often provide conflicting information, developing new ways of estimating competitiveness considering the level of digitalization is necessary.

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“…Licensing new private banks was noteworthy, as they did not have legacy issues and their license was contingent upon the full automation of their operations. Hence, along with foreign banks, they were expected to achieve more efficiency via improved technology, financial innovation, enhanced customer services and new ways of doing business (Arrawatia et al. , 2019).…”

Section: Introductionmentioning

confidence: 99%

Market power and efficiency of Indian banks: does the “quiet life” hypothesis hold?

Coccorese

Misra

2022

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PurposeThis paper investigates the relationship between market power and efficiency for Indian banks in order to test the validity of the quiet life hypothesis (QLH) during 2005–2019.Design/methodology/approachFirst, the bank-level DEA efficiency scores and three measures of the Lerner index: traditional, efficiency-adjusted, stochastic are estimated. Then, efficiency scores are regressed on Lerner indices plus a set of banking and economic control variables.FindingsRobust evidence against the QLH is obtained. Moreover, the conventional Lerner index suggests that market power of Indian banks, as well as of the different bank groups, increased during the study period, due to a greater reduction in costs compared to that of the price of banking services. The efficiency scores also declined for the banking system as a whole, and for all bank groups except new private banks.Originality/valueThis is the first study testing the QLH for the different categories of Indian banks and also provides robust inferences by using both stochastic and non-stochastic measures of market power.

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Bank Competition in India: Some New Evidence Using Risk-Adjusted Lerner Index Approach

Cited by 4 publications

References 26 publications

Competition in the Indian Banking Sector: A Panel Data Approach

Competition in the Indian Banking Sector: A Panel Data Approach

Competitiveness in Banking Sector: A Systematic Literature Review

Market power and efficiency of Indian banks: does the “quiet life” hypothesis hold?

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