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Does financial inclusion affect bank market power? International evidence

Author

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  • Setianto, Rahmat Heru
  • Azman-Saini, W.N.W
  • Law, Siong Hook
  • Ahmad, Abd Halim
  • Mohd Daud, Siti Nurazira

Abstract

This research examines the effect of financial inclusion on bank market power using a sample of 672 banks from 73 countries over the 2005–2022 period. We calculate the Lerner index for each bank to measure its market power and apply principal component analysis to construct the financial inclusion index. Empirical findings from 2SLS regression and the system generalized method of moments estimator indicate that financial inclusion has a positive impact on bank market power. Moreover, the results of dynamic panel threshold analysis show that larger banks gain more from the expansion of financial inclusion.

Suggested Citation

  • Setianto, Rahmat Heru & Azman-Saini, W.N.W & Law, Siong Hook & Ahmad, Abd Halim & Mohd Daud, Siti Nurazira, 2025. "Does financial inclusion affect bank market power? International evidence," Finance Research Letters, Elsevier, vol. 85(PE).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pe:s1544612325015569
    DOI: 10.1016/j.frl.2025.108302
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    References listed on IDEAS

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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