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

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Author Info
Chun-Yu Ho (Boston University, Hong Kong Institute for Monetary Research)

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

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Find related papers by JEL classification:
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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