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Has bank consolidation in Korea lessened competition?

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  • Park, Kang H.
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    Abstract

    This 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 Info

    Article provided by Elsevier in its journal The Quarterly Review of Economics and Finance.

    Volume (Year): 49 (2009)
    Issue (Month): 2 (May)
    Pages: 651-667

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    Handle: RePEc:eee:quaeco:v:49:y:2009:i:2:p:651-667

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    Web page: http://www.elsevier.com/locate/inca/620167

    Related research

    Keywords: Bank consolidation Market concentration Competition Korean banks;

    References

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    Cited by:
    1. Chen, Sheng-Hung & Liao, Chien-Chang, 2011. "Are foreign banks more profitable than domestic banks? Home- and host-country effects of banking market structure, governance, and supervision," Journal of Banking & Finance, Elsevier, vol. 35(4), pages 819-839, April.
    2. Tabak, Benjamin M. & Fazio, Dimas M. & Cajueiro, Daniel O., 2012. "The relationship between banking market competition and risk-taking: Do size and capitalization matter?," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3366-3381.
    3. Benjamin Miranda Tabak & Guilherme Maia Rodrigues Gomes & Maurício da Silva Medeiros Júnior, 2012. "The Impact of Market Power at Bank Level in Risk-taking: the Brazilian case," Working Papers Series 283, Central Bank of Brazil, Research Department.

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