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Testing for Competition in the Russian Banking Sector within Panzar-Rosse approach: theoretical and empirical framework

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  • Mamonov, Mikhail

    ()
    (Center for Macroeconomic Analysis and Short-term Forecasting, Russia)

Abstract

This paper investigates the influence of both concentration and foreign banks expansion in Russian banking sector on the level of its competition. The estimation of competition is based on widely used non-structural methodology of Panzar-Rosse H-statistic (Rosse, Panzar, 1977; Panzar, Rosse, 1987) and draws upon a comprehensive panel data set of 525 Russian banks covering the period 2004q1–2009q4. From the one hand, the panel estimation outcome reveals a gradually increasing time trend for the H-statistic, thus suggesting an intensification of competition in the whole sector and among the large banks especially. From the other hand, the empirical evidence provided in this paper corroborates that foreign bank expansion strengthens competition and vice versa confirms the traditional view that concentration weakens competition

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Bibliographic Info

Article provided by Publishing House "SINERGIA PRESS" in its journal Applied Econometrics.

Volume (Year): 20 (2010)
Issue (Month): 4 ()
Pages: 3-27

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Handle: RePEc:ris:apltrx:0012

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Web page: http://appliedeconometrics.cemi.rssi.ru/

Related research

Keywords: non-structural methodology of Panzar-Rosse; competition; Russian banking sector; static and dynamic panel data analysis;

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  1. Coccorese, Paolo, 2009. "Market power in local banking monopolies," Journal of Banking & Finance, Elsevier, vol. 33(7), pages 1196-1210, July.
  2. Sherrill Shaffer & James DiSalvo, 1991. "Conduct in a banking duopoly," Working Papers 91-12, Federal Reserve Bank of Philadelphia.
  3. Eduardo Levy Yeyati & Alejandro Micco, 2003. "Concentration and Foreign Penetration in Latin American Banking Sectors: Impact on Competition and Risk," Research Department Publications 4353, Inter-American Development Bank, Research Department.
  4. Barros, Fatima & Modesto, Leonor, 1999. "Portuguese banking sector: a mixed oligopoly?," International Journal of Industrial Organization, Elsevier, vol. 17(6), pages 869-886, August.
  5. J.A. Bikker & K. Haaf, 2001. "Competition, Concentration and their Relationship: an EmpiricalAnalysis of the Banking Industry," DNB Staff Reports (discontinued) 68, Netherlands Central Bank.
  6. Mikhail Mamonov & Oleg Solntsev, 2009. "Foreign Banks Expansion to Russian Banking Sector: Interim Summation, Perspective Analysis Effort," Journal of the New Economic Association, New Economic Association, issue 1-2, pages 175-189.
  7. Jacob Bikker & Laura Spierdijk & Paul Finnie, 2006. "Misspecifiation of the Panzar-Rosse Model: Assessing Competition in the Banking Industry," DNB Working Papers 114, Netherlands Central Bank, Research Department.
  8. Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92.
  9. Claessens, Stijn & Laeven, Luc, 2005. "Financial dependence, banking sector competition, and economic growth," Policy Research Working Paper Series 3481, The World Bank.
  10. Panzar, John C & Rosse, James N, 1987. "Testing for "Monopoly" Equilibrium," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 443-56, June.
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Cited by:
  1. Mamonov, Mikhail, 2012. "The impact of market power of Russian banks on their credit risk tolerance: A panel study," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 28(4), pages 85-112.

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