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Effects Of Market Concentration On Profitability Among Commercial Banks In Bulgaria

Author

Listed:
  • Alexander Todorov

    (Varna University of Economics)

Abstract

The paper at hand presents a theoretical and empirical analysis of the relationship between market concentration and profitability using the banking sector in Bulgaria as an example. The two main hypotheses of the study are derived from a theoretical framework based on a static model of oligopoly. The first hypothesis suggests that companies with a higher market shares are expected to be more profitable, while the second hypothesis suggests that industry profitability increases with an increase in market concentration, measured by the Herfindahl index. To test these two hypotheses an appropriate econometric model is proposed. The model is estimated using a balanced panel data for commercial banks in Bulgaria for the period 2008 to 2013.

Suggested Citation

  • Alexander Todorov, 2015. "Effects Of Market Concentration On Profitability Among Commercial Banks In Bulgaria," Business & Management Compass, University of Economics Varna, issue 3, pages 44-54.
    • Handle: RePEc:vrn:journl:y:2015:i:3:p:44-54
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    More about this item

    Keywords

    competition; market structure; banking industry;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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