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Testing for Competition in the Russian Banking Sector within Panzar-Rosse approach: theoretical and empirical framework

  • Mamonov, Mikhail

    ()

    (Center for Macroeconomic Analysis and Short-term Forecasting, Russia)

This paper investigates the influence of both concentration and foreign banks expansion in Russian banking sector on the level of its competition. The estimation of competition is based on widely used non-structural methodology of Panzar-Rosse H-statistic (Rosse, Panzar, 1977; Panzar, Rosse, 1987) and draws upon a comprehensive panel data set of 525 Russian banks covering the period 2004q1–2009q4. From the one hand, the panel estimation outcome reveals a gradually increasing time trend for the H-statistic, thus suggesting an intensification of competition in the whole sector and among the large banks especially. From the other hand, the empirical evidence provided in this paper corroborates that foreign bank expansion strengthens competition and vice versa confirms the traditional view that concentration weakens competition

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Article provided by Publishing House "SINERGIA PRESS" in its journal Applied Econometrics.

Volume (Year): 20 (2010)
Issue (Month): 4 ()
Pages: 3-27

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Handle: RePEc:ris:apltrx:0012
Contact details of provider: Web page: http://appliedeconometrics.cemi.rssi.ru/

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  1. Shaffer, Sherrill & DiSalvo, James, 1994. "Conduct in a banking duopoly," Journal of Banking & Finance, Elsevier, vol. 18(6), pages 1063-1082, December.
  2. Eduardo Levy Yeyati & Alejandro Micco, 2003. "Concentration and Foreign Penetration in Latin American Banking Sectors: Impact on Competition and Risk," Research Department Publications 4353, Inter-American Development Bank, Research Department.
  3. Panzar, John C & Rosse, James N, 1987. "Testing for "Monopoly" Equilibrium," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 443-56, June.
  4. Barros, Fatima & Modesto, Leonor, 1999. "Portuguese banking sector: a mixed oligopoly?," International Journal of Industrial Organization, Elsevier, vol. 17(6), pages 869-886, August.
  5. Claessens, Stijn & Laeven, Luc, 2005. "Financial dependence, banking sector competition, and economic growth," Policy Research Working Paper Series 3481, The World Bank.
  6. 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.
  7. Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92.
  8. Mikhail Mamonov & Oleg Solntsev, 2009. "Foreign Banks Expansion to Russian Banking Sector: Interim Summation, Perspective Analysis Effort," Journal of the New Economic Association, New Economic Association, issue 1-2, pages 175-189.
  9. Coccorese, Paolo, 2009. "Market power in local banking monopolies," Journal of Banking & Finance, Elsevier, vol. 33(7), pages 1196-1210, July.
  10. Jacob Bikker & Laura Spierdijk & Paul Finnie, 2006. "Misspecifiation of the Panzar-Rosse Model: Assessing Competition in the Banking Industry," DNB Working Papers 114, Netherlands Central Bank, Research Department.
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