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Market structure and bank conduct in Lesotho

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  • Ramaele Moshoeshoe
  • Katleho Thokoa

Abstract

Lesotho's banking industry is highly concentrated and is perceived to be uncompetitive. However, high market concentration does not necessarily imply a lack of competition in the market. Until now, there is no evidence supporting the view that the industry is uncompetitive. Therefore, this paper uses monthly bank‐level data from 2013:10 to 2019:5, and employs the Panzar‐Rosse H‐statistic and the Boone indicator to examine competition in Lesotho's banking industry. We find that the industry acts as a ‘monopoly’ or a ‘perfectly colluding oligopoly’. We, therefore, argue that policy makers should set up the long anticipated antitrust agency to oversee conduct in this industry, and all other industries to improve societal welfare.

Suggested Citation

  • Ramaele Moshoeshoe & Katleho Thokoa, 2021. "Market structure and bank conduct in Lesotho," South African Journal of Economics, Economic Society of South Africa, vol. 89(3), pages 368-390, September.
    • Handle: RePEc:bla:sajeco:v:89:y:2021:i:3:p:368-390
    DOI: 10.1111/saje.12288
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