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Estimation of the competitive conditions in the Czech banking sector

Author

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  • Daniel Stavárek

    (Slezská univerzita v Opavě, Obchodně podnikatelská fakulta v Karviné, Katedra financí, Univerzitní náměstí 1934/3, 733 40 Karviná, Česká republika)

  • Iveta Řepková

    (Slezská univerzita v Opavě, Obchodně podnikatelská fakulta v Karviné, Katedra financí, Univerzitní náměstí 1934/3, 733 40 Karviná, Česká republika)

Abstract

The paper uses New Empirical Industrial Organization approach, especially Panzar-Rosse model to estimates the level of competition of the banking industry in the Czech Republic during the period 2001-2009. We apply Panzar-Rosse model to estimate H statistic for a panel of 15 banks, which represent almost 90 % of the market. This paper also measures and compares the degree of banking competition in two sub-periods, 2001-2005 and 2005-2009, in order to investigate development of the competitive structure of the Czech banking industry. We found that the market was in equilibrium during most of the estimation period, which is a necessary condition for sound evaluation of the competition level. While the market can be described as perfectly competitive in 2001-2005, the intensity of competition decreased after joining the EU in 2004 and the market can be characterized as one of monopolistic competition in 2005-2009. The monopolistic competition in the Czech banking market was also revealed if the full sample 2001-2009 is considered.

Suggested Citation

  • Daniel Stavárek & Iveta Řepková, 2011. "Estimation of the competitive conditions in the Czech banking sector," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 59(2), pages 299-306.
    • Handle: RePEc:mup:actaun:actaun_2011059020299
    DOI: 10.11118/actaun201159020299
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    Cited by:

    1. Olszak, Małgorzata & Świtała, Filip & Kowalska, Iwona, 2013. "Competition in commercial banks in Poland – analysis of Panzar-Rosse H-statistics," MPRA Paper 53782, University Library of Munich, Germany.
    2. Mohammed, Nafisah & Muhammad, Junaina & ismail, abdul, 2018. "The Degree of Competition in the Malaysian Dual Banking Industry," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(3), pages 71-89.

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    More about this item

    Keywords

    Panzar-Rosse model; competition; banking sector; Czech Republic;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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