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Evolution and Current Status of the Competitive Environment in the Serbian Banking Sector: Concentration Indices Analysis

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  • Bukvić, Rajko

Abstract

This paper analyzes the degree of concentration and competition in the Serbian banking sector during the 2010-2017 period and in its current state, by considering the financial statements of banks for the years 2016 and 2017. For this purpose, both traditional concentration indicators (concentration ratio CRn and the Herfindahl-Hirschman index), and the relatively rarely used Linda indices have been used. The degree of concentration has been calculated based on five variables: total assets, deposits, capital, operating income of banks, and loans. The degree to which these indicators are compliant with the basic antitrust regulations has been illustrated. It has been demonstrated that in the current case of a relatively large number of banks operating in Serbia, the existing degree of concentration is relatively low. This provides suitable conditions for the development of healthy competition among them. However, the approximation of the indices to moderate concentration within the period analyzed warns of the appearance of oligopoly.

Suggested Citation

  • Bukvić, Rajko, 2019. "Evolution and Current Status of the Competitive Environment in the Serbian Banking Sector: Concentration Indices Analysis," MPRA Paper 98341, University Library of Munich, Germany, revised 2019.
  • Handle: RePEc:pra:mprapa:98341
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    File URL: https://mpra.ub.uni-muenchen.de/98341/1/MPRA_paper_98341.pdf
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    More about this item

    Keywords

    concentration; competition; banking sector; Serbia; Linda indices; Herfindahl-Hirschman index; concentration ratio; antitrust policy;

    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

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