Competition and structure of South Asian banking: a revenue behaviour approach

Abstract

This paper examines the nature of competition and structure in South Asian banking markets. It also assesses whether traditional interest-based product market segments are more competitive than those that also include fee- and commission-based products. The reduced form Panzar-Rosse specification tests show that bank revenues appear to be earned under conditions of monopolistic competition during the period 1995 to 2003. In Bangladesh and Pakistan competition is greater in the traditional interest-based product markets while Indian and Sri Lankan domestic commercial banks seem to face more competitive pressure in the fee-based product market from other financial intermediaries.

Consolidation and Competition in Emerging Market: An Empirical Test for Malaysian Banking Industry

“…This is consistent with other studies on developing countries that find H-statistics between zero and one (Al-Muharrami et al, 2006;Perera et al 2006). The Wald test rejects the hypothesis for the market structure of monopoly or perfect competition for both periods of investigation.…”

“…The (1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005) ln TREV Perera et al 2006) that find H-statistics between zero and one (i.e. monopolistic competition).…”

“…For this reason, it is appropriate to include total revenues in the model in addition to interest revenues. This study follows previous studies (Molyneux et al 1994;Perera et al 2006;Al-Muharrami et al 2006) assuming that all funds are input in banks' production function. Under this intermediation approach, banks use three inputs namely labour, deposit and capital.…”

“…Specifically, the input variables used in this study are the average cost of labour, deposits and capital. Following Shaffer (1982), Nathan and Neave (1989), Molyneux et al (1994), Perera et al (2006) and Al-Muharrami et al (2006), the reduced-form total revenue (TREV) and total interest revenue, (TINT) equation can be written as:…”

Evaluating the state of competition of the Greek banking industry

“…Many studies have used the Panzar-Rosse approach to investigate competitive conditions and market structure in banking, for example the studies by Casu and Girardone (2006), Staikouras and Koutsomanoli-Fillipaki (2006), Bikker andHaaf (2002, 2000), De Bandt and Davis (2000), and Molyneux et al (1994) for European banking; Allen and Liu (2007) for Canadian banking; Gutierrez de Rozas (2007) for Spanish banking; Pererera et al (2006) for South Asian banking; Yuan (2006) for Chinese banking; Prasad and Ghosh (2005) for Italian banking; Buchs and Mathisen (2005) for Ghanaian banking; Claessens and Laeven (2004) for banking in 50 counties around the world; and Hondroyiannis et al (1999) for Greek banking. There are fewer studies in the literature investigating banking competition using the Bresnahan-Lau approach.…”