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Is the Nigerian Commercial Banking Industry Experiencing any Competition? An Empirical Approach

Author

Listed:
  • Onanuga, Abayomi
  • Oshinloye, Michael
  • Onanuga, Olaronke

Abstract

The paper investigates the level of competition in the loans and deposit market of the Nigerian commercial banking sector in the post re-capitalization period 2007- 2011 using Herfindahl-Hirschman Index (HHI) and Concentration Ratio (CR). The weighted average reveals that in the deposit market 3 banks control 39.4% and in the loans market 2 banks provide 19%. The HHI result of 1073 in the deposit market and 2419 in the loans market infers that the level of competition is higher in the deposit market than the loans market. The Nigerian banking industry is neither highly competitive nor experiencing acute market concentration.

Suggested Citation

  • Onanuga, Abayomi & Oshinloye, Michael & Onanuga, Olaronke, 2015. "Is the Nigerian Commercial Banking Industry Experiencing any Competition? An Empirical Approach," MPRA Paper 83333, University Library of Munich, Germany, revised 15 Apr 2016.
    • Handle: RePEc:pra:mprapa:83333
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    References listed on IDEAS

    as
    1. Berger, Allen N & Hannan, Timothy H, 1989. "The Price-Concentration Relationship in Banking," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 291-299, May.
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    3. De Bandt, Olivier & Davis, E. Philip, 2000. "Competition, contestability and market structure in European banking sectors on the eve of EMU," Journal of Banking & Finance, Elsevier, vol. 24(6), pages 1045-1066, June.
    4. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
    5. Bikker, Jacob A. & Haaf, Katharina, 2002. "Competition, concentration and their relationship: An empirical analysis of the banking industry," Journal of Banking & Finance, Elsevier, vol. 26(11), pages 2191-2214, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    competition; banks; concentration-ratio;
    All these keywords.

    JEL classification:

    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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