IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Working Paper 168 - Competition and Market Structure in the Zambian Banking Sector

Studies on banking competition in developing countries, and especially in Africa, are sparse. This study evaluates the degree of competition in the Zambian banking sector in the wake of dynamic market shifts induced by entry of new foreign banks and privatisation of the state-owned bank. Using a detailed bank-level panel data set, we measure competition using the H-statistic and the time varying Lerner index. The estimation of Lerner index provides the first ever documented empirical evidence on the evolution of competition in the Zambian industry. This is important in assessing foreign influence on competitiveness. For the H-statistic, results show that Zambian banks earned their revenue under conditions of monopolistic competition. This finding is corroborated by the estimate of the Lerner index which suggests that the degree of competitiveness may not be as low as previously understood. The study shows that risk taking, revenue diversity and regulatory intensity are all important determinants of market power. Tight monetary policy is also found to strengthen the banks’ exercise of market power. Generally, the findings lend support to previous research suggesting that increased foreign bank penetration and divestiture of state ownership in banking can heighten competitive pressures in the banking sector. Thus, the main policy lessons drawn from the analysis is that competitive conditions could be further enhanced by easing regulatory impediments and in the long-run, allowing more foreign bank participation could spur competitive conduct in the industry.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Working%20Paper%20168%20-%20Competition%20and%20Market%20Structure%20in%20the%20Zambian%20Banking%20Sector.pdf
Download Restriction: no

Paper provided by African Development Bank in its series Working Paper Series with number 447.

as
in new window

Length:
Date of creation: 26 Feb 2013
Date of revision:
Handle: RePEc:adb:adbwps:447
Contact details of provider: Postal: 15 Avenue du Ghana P.O.Box 323-1002 Tunis-Belvedère, Tunisia
Phone: (+216) 71 10 39 00
Fax: (225) 21.77.53
Web page: http://www.afdb.org/en/knowledge/publications/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Delis, Manthos D & Staikouras, Christos & Varlagas, Panagiotis, 2008. "On the measurement of market power in the banking industry," MPRA Paper 14038, University Library of Munich, Germany.
  2. Beck, Thorsten & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2004. "Bank Competition and Access to Finance: International Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 627-48, June.
  3. H. Semih Yildirim & George C. Philippatos, 2007. "Competition and contestability in Central and Eastern European banking markets," Managerial Finance, Emerald Group Publishing, vol. 33(3), pages 195-209.
  4. Q.q. anthony Aboagye & S.k. Akoena & T.o. Antwi-asare & A.f. Gockel, 2008. "Explaining The Market Power Of Ghanaian Banks," South African Journal of Economics, Economic Society of South Africa, vol. 76(4), pages 569-585, December.
  5. Juan Fernández De Guevara & Joaquín Maudos, 2007. "Explanatory Factors Of Market Power In The Banking System," Manchester School, University of Manchester, vol. 75(3), pages 275-296, 06.
  6. Anzoategui Diego & Martinez Peria Maria S. & Rocha Roberto R, 2010. "Bank Competition in the Middle East and Northern Africa Region," Review of Middle East Economics and Finance, De Gruyter, vol. 6(2), pages 26-48, November.
  7. Petersen, Mitchell A & Rajan, Raghuram G, 1995. "The Effect of Credit Market Competition on Lending Relationships," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 407-43, May.
  8. Iwata, Gyoichi, 1974. "Measurement of Conjectural Variations in Oligopoly," Econometrica, Econometric Society, vol. 42(5), pages 947-66, September.
  9. Nicola Cetorelli, 1999. "Competitive analysis in banking: appraisal of the methodologies," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 2-15.
  10. Eduardo Levy Yeyati & Alejandro Micco, 2003. "Concentration and Foreign Penetration in Latin American Banking Sectors: Impact on Competition and Risk," IDB Publications (Working Papers) 6514, Inter-American Development Bank.
  11. 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.
  12. Arellano, Manuel, 2003. "Panel Data Econometrics," OUP Catalogue, Oxford University Press, number 9780199245291, March.
  13. 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.
  14. Daniel Hoechle, 2007. "Robust standard errors for panel regressions with cross-sectional dependence," Stata Journal, StataCorp LP, vol. 7(3), pages 281-312, September.
  15. 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.
  16. Lau, Lawrence J., 1982. "On identifying the degree of competitiveness from industry price and output data," Economics Letters, Elsevier, vol. 10(1-2), pages 93-99.
  17. Francisco Pérez García & Joaquín Maudos Villarroya & Juan Francisco Fernández de Guevara Radoselovics, 2002. "Market Power In European Banking Sectors," Working Papers. Serie EC 2002-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  18. Chuling Chen, 2009. "Bank Efficiency in Sub-Saharan African Middle Income Countries," IMF Working Papers 09/14, International Monetary Fund.
  19. Rochet, Jean-Charles, 1992. "Capital requirements and the behaviour of commercial banks," European Economic Review, Elsevier, vol. 36(5), pages 1137-1170, June.
  20. Semih Yildirim & George C. Philippatos, 2003. "Competition And Contestability In Central And Eastern European Banking Markets," Finance 0310004, EconWPA.
  21. Gelos, R. G. & Roldos, Jorge, 2004. "Consolidation and market structure in emerging market banking systems," Emerging Markets Review, Elsevier, vol. 5(1), pages 39-59, March.
  22. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
  23. Carol Ann Northcott, 2004. "Competition in Banking: A Review of the Literature," Working Papers 04-24, Bank of Canada.
  24. Molyneux, Phil & Lloyd-Williams, D. M. & Thornton, John, 1994. "Competitive conditions in european banking," Journal of Banking & Finance, Elsevier, vol. 18(3), pages 445-459, May.
  25. Shaffer, Sherrill, 1983. "Non-structural measures of competition : Toward a synthesis of alternatives," Economics Letters, Elsevier, vol. 12(3-4), pages 349-353.
  26. Coccorese, Paolo, 2009. "Market power in local banking monopolies," Journal of Banking & Finance, Elsevier, vol. 33(7), pages 1196-1210, July.
  27. Angelini, Paolo & Cetorelli, Nicola, 2003. " The Effects of Regulatory Reform on Competition in the Banking Industry," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(5), pages 663-84, October.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:adb:adbwps:447. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Adeleke Oluwole Salami)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.