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The Role of Simultaneous Regulations of Credit Services and Payment Services on Competition

Author

Listed:
  • G. Gulsun Akin
  • Ahmet Faruk Aysan

    (Bogazici University)

  • Denada Boriçi
  • Levent Yildiran

Abstract

The paper investigates the competition among 21 credit card issuers in Turkey, covering the time period between 2002 and 2008. Analysis is conducted by using an estimation methodology designed by Panzar and Rosse (1982, 1987), where the degree of competition is measured by the sum of elasticities of total revenue with respect to input prices. Accounting for the total revenue rather than interest revenue fills the gap in previous studies, which look only at one side of the credit card market. Liquidity management cost, which was first shown by Shaffer and Thomas (2007) to be important for evaluating the degree of competition in the credit card industry, emerges as an important variable. The estimated Panzar-Rosse statistics are consistent with product differentiation, implying that Turkish credit card issuers are involved in monopolistic competition.

Suggested Citation

  • G. Gulsun Akin & Ahmet Faruk Aysan & Denada Boriçi & Levent Yildiran, 2011. "The Role of Simultaneous Regulations of Credit Services and Payment Services on Competition," Working Papers 604, Economic Research Forum, revised 08 Jan 2011.
    • Handle: RePEc:erg:wpaper:604
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    References listed on IDEAS

    as
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