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Deregulation, Competition and Consumer Welfare in Banking Market: Evidence from Hong Kong

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  • Chun-Yu Ho

    (Boston University, Hong Kong Institute for Monetary Research)

Abstract

This paper examines competition among commercial banks following deregulation in a small open economy. I jointly estimate a system of differentiated product demand and pricing equations, and use conduct parameters to identify market structure. The empirical results show that the banking sector is characterized by the Nash-Bertrand equilibrium in which bank size is important for product differentiation. Following deregulation, bank competition intensifies and cost efficiency improves.

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Bibliographic Info

Paper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 242007.

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Length: 29 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:hkm:wpaper:242007

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Keywords: Banking; Conduct Parameters; Consumer Welfare; Demand; Deregulation; Hong Kong; Product Differentiation;

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Citations

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Cited by:
  1. Ho, Chun-Yu, 2014. "Switching cost and deposit demand in China," BOFIT Discussion Papers 9/2014, Bank of Finland, Institute for Economies in Transition.
  2. Chang, Shun-Chiao & Chang, Jui-Chuan Della & Huang, Tai-Hsin, 2012. "Assessing market power in the U.S. commercial banking industry under deregulation," Economic Modelling, Elsevier, vol. 29(5), pages 1558-1565.
  3. Ho, Chun-Yu, 2012. "Market structure, welfare, and banking reform in China," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 291-313.

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