• Environmental and Resource Economics Review
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• v.15 no.1
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• pp.51-69
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• 2006

This paper analyze the degree of competitiveness of the refining industry after price liberalization. We use two well-known methods: the first is Bresnahan (1982) and Lau (1982) method that estimates a structural model consisting of a demand relation and supply relation and the second is Panzar and Rosse (1987) method that estimates non structural model of the sum of elasticities of gross revenue with respect to input prices. Results from two models show mixed sign, however, our results indicate that price liberalization improved the degree of competitiveness.

• Journal of the Korea Convergence Society
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• v.7 no.5
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• pp.201-211
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• 2016

This paper uses the Panzar Rosse model to investigate the competitive conditions in the Korean life insurance companies over the period of 1999 2012. We break down the entire sample period into four distinctive groups and analyze the competitiveness of each period. The results indicate that for the pre-introduction of Bancassurance period, the H-statistic is -1.3984 and the life insurance market is found to be in monopoly or cartel. However, for the post-introduction of Bancassurance period, the H-statistic is 0.9107 and the life insurance market appears to be in monopolistic competition. The results from the introduction of retirement pension system are very similar to those of the introduction of Bancassurance. Overall, the findings indicate that the Korean life insurance market is in long-run equilibrium before the new system introduction, but make adjustments to the new equilibrium.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.11
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• pp.759-768
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• 2020

The purpose of this study is to assess the state of competition in Nepalese banking over the period from 2010 to 2019. This study employs panel data and a non-structural Panzar-Rosse model to measure the degree of competition in the Nepalese banking industry. The first reduced-form equation is applied to gauge competition, and the second model is used to test the long-run equilibrium in the banking market. The finding reveals that the Nepalese banking market is equilibrium in the long-run. It implies that the factor prices do not affect ROA in the long-run. The result of the H-statistic shows that the Nepalese banking system is operating under the state of perfect competition and is shifted from monopolistic competition to perfect competition. The reduced-form model reveals that the interest income is positive and significantly affected by factor prices. Similarly, the macroeconomic variable GDP growth is positively related to interest income. On the contrary, the bank's specific factors risk and the number of bank branches are inversely associated with the regressand. The outcomes of the study may be advantageous to the policymakers, especially to Nepal Rastra Bank to implement monetary policy and M&A policy for the stability and growth of the financial system of Nepal.

• Journal of Distribution Science
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• v.14 no.6
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• pp.39-44
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• 2016

Purpose - This paper aims to study the competition that occurs in the Islamic Banking industry and to analyze the variables that affect the total revenue of Islamic Banking in Indonesia. Research Design, Data and Methodology - This study observed 10Islamic banks for the period 2010-2013. The annual data are taken from Direktori Perbankan Indonesia, published by Bank Indonesia, and annual report of the observed banks. In analyzing data, Panzar Rosse Approach was applied to analyze the type of Islamic Bank Market and Panel Regression Model for the estimated co-efficients has been used in the Panzar Rosse Approach. Results - Estimation model shows that all the banking cost elements such as the price of capital, unit price of labor, and unit prices of funds have significant positive correlation to Revenue as a dependent variable. The estimated value of H-statistic for the period 2010-2013 is 0.69. It can be interpreted that Islamic banking market in Indonesia shows monopolistic competition. Price of capital and funds has statistically significant effect on Bank's Revenue. Conclusions - The study revealed that the Islamic banking market competition in Indonesia is monopolistic and the major contribution to the H-statistic comes from mainly price of funds.

• KDI Journal of Economic Policy
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• v.38 no.1
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• pp.53-70
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• 2016

This paper examines market concentration and its effect on competition in the Chinese commercial banking market. This study also investigates how changes in competition have affected the financial stability of Chinese commercial banks. To test the competitive conditions, we obtained the H statistic of the Panzar-Rosse model from a revenue function equation. The degree of financial stability is estimated by the Z-score formula. The Chinese banking industry has become an increasingly less concentrated market with an increased number of banks. Along with a decreased market concentration, competition in the Chinese banking industry has improved moderately. However, its market structure is still far from a competitive market. An individual bank's ability to earn higher markup or charge a higher net interest margin contributes to its financial soundness, although a higher degree of market concentration may have negative effect on the financial stability of the entire banking system.

• The Journal of Industrial Distribution & Business
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• v.9 no.4
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• pp.19-26
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• 2018

Purpose - This study measures how competitive securities broker-dealers are in the Korean financial markets. It aims to test whether the markets are perfectly competitive or monopolistic since the global financial crisis of 2008. Research design, data, and methodology - We apply the method developed by Panzar and Rosse (1987), H-statistics, which offers an index for the competitiveness as well as statistical tests. The dataset in use is retrieved mainly from the quarterly statements of the financial services companies by the Financial Statistics Information System of the Financial Supervisory Service. General information on officers and employees is utilized in addition to balance sheets and income statements of securities companies. Results - H-statistics for 2009-2015 is about 0.7 that is a robust estimate regardless of model specifications such as full trans-log, partial trans-log, and Cobb-Douglas regression equations. H-statistics for each year is also computed in similar ways in that it varies between 0.3 and 0.9. Conclusions - Since the global financial crisis, H-statistics concludes that securities broker-dealer markets in Korea is neither perfectly competitive nor monopolistic. It evidences that the markets are rather monopolistically competitive. The trend in annual H-statistics leads to the same conclusion but the result is not such stable that overall H-statistics implies.

• KDI Journal of Economic Policy
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• v.33 no.3
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• pp.33-55
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• 2011

Market concentration in the Korean banking industry has markedly increased since the financial crisis of 1997-1998 because of M&As, P&As, and consolidation of banks. With this change, there has been a growing concern over market power in the Korean banking sector. We examine the effects of market concentration on bank efficiency and competition for the period of 1992-2006. Three different indicators of bank inefficiency are used in this study, including X-inefficiency that is derived from the directional technology distance function. The level of competition is measured by both the H-statistic of the Panzar-Rosse model and the level of the net interest margin and its standard deviation. Empirical results indicate that market concentration has not improved bank efficiency through scale economies or scope economies. Instead, recent mergers, acquisitions and consolidation of banks resulted in an increase in inefficiency measured by the three different indicators: X-inefficiency, labor inefficiency and asset inefficiency. While an increase in market share of individual banks improved bank efficiency, an increase in the overall market concentration ratio resulted in lower efficiency. Our study also finds that the Korean banking sector has been monopolistically competitive throughout the sample period except for the crisis period according to the H-statistic. Although an increase in market concentration ratio has not changed the overall level of bank competition, it has a positive significant effect on the level of the average interest margin.

• International Area Studies Review
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• v.13 no.3
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• pp.3-27
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• 2009

This paper measures market power in the Mongolian banking sector using bank level panel data for commercial banks over the period of 1999 - 2006. In the literature, studies on banking competition have largely focused on the banking sectors of developed economies. However, banking competition in developing countries such as Mongolia has been largely neglected. This paper is an attempt to fill this gap. We find that both the monopoly hypothesis and the perfect competition hypothesis are rejected and that the Mongolian banking sector is instead characterized by monopolistic competition. We thus find that the Mongolian banking sector is more competitive than market concentration measures may suggest. We infer that the entries of new banks have strengthened market competitiveness.