Estimation of the Banking Sector Competition  in the Cee Countries: The Panzar-Rosse Approach

Mustafa, Arben; Toçi, Valentin

doi:10.18045/zbefri.2017.2.459

Cited by 8 publications

(6 citation statements)

References 34 publications

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“…Second explanatory variable, the ratio of interest expenses to total deposits (RIETD) is employed in the model to control the unit price of funds. In their research, [8], [11], [13], [14], and [16] also used the same proxy variable for control the unit price of funds. It is anticipated that this variable has a positive relationship with dependence variable because that more collected deposits increase loans portfolio and consecutively generates more revenues.…”

Section: Methodsmentioning

confidence: 99%

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Exploring banking competition in Croatia by using the Panzar-Rosse model

Busatlic,

Koylu,

Plojovic

2023

PEN

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The performance commercial banks in the Croatia have been widely studied, but there is little known about the examination of the nature of competition. For these reasons, it is important to investigate whether the banking sector in Croatia exerts monopoly or monopolistic behavior. This research empirically explores the nature of competition in the Croatian banking sector by covering 24 commercial banks between 2008 and 2018. In this vein, the panel data analysis was used along with H-Statistics. This study for Croatia and its findings confirms early findings of the existence of monopolistic competition in the most transition and developing countries. In fact, the findings obtained from this study reveals that the commercial banks in Croatia operate under monopolistic structure. Moreover, the results reveal that variable of RIETD, RLTA, RETA, and RDTA are statically significant. It indicates that banks operated in Croatia are focus more on traditional loans than other activities.

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Section: Methodsmentioning

confidence: 99%

“…The authors revealing that the banking sector acting under monopolistic competition. On the contrary, by using the GMM model [16], investigated the sample of 300 banks in CEE countries between 1999 and 2009. The findings of study indicate that banks in CEE countries exert monopoly behavior.…”

Section: Literature Reviewmentioning

confidence: 99%

Exploring banking competition in Croatia by using the Panzar-Rosse model

Busatlic,

Koylu,

Plojovic

2023

PEN

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“…According to findings the Polish banking system has a monopolistic competitive market structure in the whole period, although the average H statistical value obtained as a result of three different models shows a fluctuating structure. Mustafa and Toçi (2017) examined the banking market competition conditions of 17 countries in Central and Eastern Europe (CEE) in the period 1999-2009. According to the H statistics value obtained from the dynamic panel data analysis using 300 bank data, it was found that CEE banks exhibit monopoly behavior.…”

Section: Literature Reviewmentioning

confidence: 99%

The Effect of the Global Financial Crisis on the Market Structure: The Case of the Turkish Banking Sector

Başaran¹,

Ildırar²

2021

Ekonomi, Politika &Amp; Finans Araştırmaları Dergisi

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In this study, the market structure and competition level of the Turkish banking sector are investigated by employing a dynamic panel data method and using the data of the 2003-2018 period. For this purpose, within the framework of the non-structural Panzar-Rosse model, H statistical values were calculated for the period 2003-2018 and sub-periods 2003-2009 and 2010-2018 to investigate the effects of the Global Financial Crisis. According to the findings, the Turkish banking sector has a monopolistic competitive structure in the period of 2003-2018, in accordance with the classification in the literature. However, considering the structure of the Turkish banking sector, it can be stated that the sector has an oligopolistic structure. H statistical values also calculated for the 2003-2009 and 2010-2018 sub-periods that the level of competition in the sector is notably low, although the oligopolistic structure is maintained. Also, it is observed that the competition level of the sector decreased after the Global Financial Crisis, when the H statistics calculated for the two sub-periods are compared.

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“…The nonstructural studies (e.g., Rodriguez, Bolivar, & Reyes, 2018;Demirel & Hatirli, 2017;Bikker, Shaffer, & Spierdijk, 2012;Aktan & Masood, 2010;Gischer & Stiele, 2008;Casu & Giradone, 2006) rely on Bresnahan-Lau model, Lener index, and the Panzar-Rosse model. Typically, studies of this nature identify the industry as monopolistically competitive, however, some characterize it as perfectly competitive (e.g., Shaffer, 1993;Nathan & Neave, 1989), oligopoly (e.g., Babic, Zildzovic, & Loncar, 2015;Mensi, 2010), or monopoly (e.g., Mustafa & Toci, 2017). The structural approach relies on proxies such as Herfindahl-Hirschman Index (HHI) and concentration ratio of n firms (CR n ) to elucidate the level of competition in the industry (Nguyen, 2019;Bikker, Shaffer, & Spierdijk, 2012;Berger, Demirguc-Kunt, Levine, & Haubrich, 2004).…”

Section: Literature Reviewmentioning

confidence: 99%

Canadian Banking Industry Profitability: Exploring the Relevance of Two Competing Hypotheses

Oredegbe¹

2020

IJEF

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This study investigates the Canadian banking industry profitability and seeks to determine if there is evidence of market power hypothesis (MPH) and/or efficiency structure hypothesis (ESH) in the industry. Using GMM and data from 2006 to 2018, it finds no support for the structure-conduct-performance (SCP) component of MPH. However, evidence of relative market power (RMP) in the industry reflects partial support for MPH, implying that banks that offer differentiated products are able to exercise market power, increase market share, and achieve better profitability. The lack of support for X-efficiency (ESX) and scale efficiency (ESS), which are components of ESH, indicates no support for the ESH. The finding that QLH holds in the industry suggests the level of competition is inadequate and that managers in the industry exhibit suboptimal behaviour. Therefore, increasing the level of competition in the industry will stimulate managerial effectiveness. Findings relating to the control variables show that spread impedes profitability, whereas capitalization and the joint influence of spread and liquidity risk have facilitating effects. Credit risk is immaterial to profitability however, the effect of economic growth can be positive. This study provides a better understanding of the industry, which is important to managers, regulators, and policy makers. The robustness checks affirm the consistency of the findings and policy implications.

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Estimation of the Banking Sector Competition in the Cee Countries: The Panzar-Rosse Approach

Abstract: Competitive conditions in the banking sectors in the light of transition process in the

Cited by 8 publications

References 34 publications

Exploring banking competition in Croatia by using the Panzar-Rosse model

Exploring banking competition in Croatia by using the Panzar-Rosse model

The Effect of the Global Financial Crisis on the Market Structure: The Case of the Turkish Banking Sector

Canadian Banking Industry Profitability: Exploring the Relevance of Two Competing Hypotheses

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