Assessment of Competition in the Banking Sector of Lithuania / Konkurencijos Lietuvos Bankininkystės Sektoriuje Vertinimas

Abstract

Abstract. Competition in the banking sector is different from the competition in the other sectors. Banks can compete only on the basis of banking products. Also, banks are dependent on each other -actions of every market participant may strongly affect the others. Problems of one bank may encourage distrust of the entire banking system. Analysis of Lithuanian banking sector has showed that country's banking sector can be divided into three groups -the biggest banks, smaller and medium-sized banks and foreign banks branches. The largest part of banking sector is concentrated in activity of the three banks. All these banks are owned by Scandinavian capital. Lithuanian banking sector is highly concentrated. In 2005-2012 years the average mean of three banks concentration index (CR3) in deposits, assets and loans markets was 68 percent. According to these high values of concentration rates, Lithuanian banking sector can be characterized as oligopoly.