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Market Concentration in banking sector of Serbia: decomposition of the Changes in 2016–2021

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  • Bukvić, Rajko

Abstract

On the basis of five balance variables in bank balances (total assets, deposits, capital, operating income, and loans), the Hirschman–Herfindahl indices for period 2016–2021 are calculated. The indices values are decomposed by the Bajo and Salas approach, based on the fact that the Hirschman-Herfindahl index is a special case of the Hanna-Kay index. So the impacts of number of banks and dispersion of its market shares are established. Then we classified the concentration changes, depending on relations between the rates of changes of two factors. They were unequal and vary during the years. Among the identified types of changes there was the most frequent decrease of HHI, caused by decrease of inequality of market shares and decrease of number of banks, where the first was greater. Finally, in 2021, the number of banks decreased with an increase in the dispersion of their shares in the three variables, which from a theoretical point of view is a clear condition for the growth of the concentration index. In the case of the remaining two variables, the dispersion of the share was reduced, so that the realized change in the Hirschman–Herfindahl index belonged to the second type.

Suggested Citation

  • Bukvić, Rajko, 2023. "Market Concentration in banking sector of Serbia: decomposition of the Changes in 2016–2021," MPRA Paper 120970, University Library of Munich, Germany, revised 2023.
    • Handle: RePEc:pra:mprapa:120970
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    References listed on IDEAS

    as
    1. Oscar Bajo & Rafael Salas, 2002. "Inequality foundations of concentration measures: An application to the Hannah-Kay indices," Spanish Economic Review, Springer;Spanish Economic Association, vol. 4(4), pages 311-316.
    2. Bukvić, Rajko, 2020. "Measuring of Concentration and Competition: Serbian Banking Sector," MPRA Paper 107465, University Library of Munich, Germany, revised 2020.
    3. Adelman, M A, 1969. "Comment on the "H" Concentration Measure as a Numbers-Equivalent," The Review of Economics and Statistics, MIT Press, vol. 51(1), pages 99-101, February.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    market concentration; banking sector; decomposition of the index Hirschman–Herfindahl; number of banks; dispersion of market shares; types of the concentration degree changes;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other

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