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Measuring Competition using the Boone Relative Profit Difference Indicator: an application to Banking Systems in Emerging Economies

Author

Listed:
  • Meryem Deygun

    (University of Leicester School of Management, UK)

  • Mohamed Shaban

    (University of Leicester School of Management, UK)

  • Tom Weyman-Jones

    (School of Business and Economics, Loughborough University, UK)

Abstract

This paper suggests an operational method for implementing the theoretical relative pro t di erence test for intensity of competition due to Boone (2008). We use polynomial quantile regressions for which integral areas and their standard errors can easily be computed and compared using Wald tests. An empirical example is presented which applies the test to a panel data sample of banks in di erent emerging economies. The results indicate that the trend towards more intense competition amongst emerging economy banks continued during the period of the nancial upheaval in 2005-2008, and that India and China among others were leading this process.

Suggested Citation

  • Meryem Deygun & Mohamed Shaban & Tom Weyman-Jones, 2013. "Measuring Competition using the Boone Relative Profit Difference Indicator: an application to Banking Systems in Emerging Economies," Discussion Paper Series 2013_05, Department of Economics, Loughborough University, revised Jun 2013.
    • Handle: RePEc:lbo:lbowps:2013_05
    as

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    File URL: http://www.lboro.ac.uk/departments/sbe/RePEc/lbo/lbowps/Weyman_Jones_WP2013_05.pdf
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    References listed on IDEAS

    as
    1. Jan Boone, 2008. "A New Way to Measure Competition," Economic Journal, Royal Economic Society, vol. 118(531), pages 1245-1261, August.
    2. Jan Boone, 2008. "A New Way to Measure Competition," Economic Journal, Royal Economic Society, vol. 118(531), pages 1245-1261, August.
    3. Braeutigam, Ronald R. & Daughety, Andrew F., 1983. "On the estimation of returns to scale using variable cost functions," Economics Letters, Elsevier, vol. 11(1-2), pages 25-31.
    4. Vickers, John, 1995. "Concepts of Competition," Oxford Economic Papers, Oxford University Press, vol. 47(1), pages 1-23, January.
    5. Kumbhakar,Subal C. & Lovell,C. A. Knox, 2003. "Stochastic Frontier Analysis," Cambridge Books, Cambridge University Press, number 9780521666633.
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    Cited by:

    1. Olszak, Małgorzata & Świtała, Filip & Kowalska, Iwona, 2013. "Competition in commercial banks in Poland – analysis of Panzar-Rosse H-statistics," MPRA Paper 53782, University Library of Munich, Germany.
    2. Duygun, Meryem & Shaban, Mohamed & Weyman-Jones, Thomas, 2015. "Measuring competition using the Boone relative profit difference indicator," Economics Letters, Elsevier, vol. 132(C), pages 117-120.
    3. Edoardo Gaffeo & Ronny Mazzocchi, 2014. "Competition in the banking sector and economic growth: panel-based international evidence," DEM Discussion Papers 2014/02, Department of Economics and Management.

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