Has bank consolidation in Korea lessened competition?
AbstractThis paper examines market concentration and competition in the Korean commercial banking market for the period of 1992-2004. While market concentration decreased due to financial regulation before the Asian financial crisis, the Korean banking industry has become increasingly concentrated in the process of restructuring and consolidation since the crisis. Contrary to a growing concern over market power in Korean banking, this study finds that increased concentration has not lessened competition. The H statistic of the Panzar-Rosse model indicates that the Korean commercial banking market was monopolistically competitive during the pre-crisis period and the post-crisis period with temporary deviation to the level of perfect competition during the crisis period.
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Bibliographic InfoArticle provided by Elsevier in its journal The Quarterly Review of Economics and Finance.
Volume (Year): 49 (2009)
Issue (Month): 2 (May)
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Bank consolidation Market concentration Competition Korean banks;
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