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Market structure in the banking sector: Evidence from a developing economy

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This paper examines the market structure of Vietnam’s banking system from 1999 to 2009 using the non-structural (Panzar-Rosse) model. We consider a more comprehensive range of specifications, in terms of a greater number of environmental covariates and different dependent variables, than in previous applications of this model. Further, this is the first study that uses lagged input prices (to avoid endogeneity) and excludes assets (to avoid specification bias) in such a study of the Vietnamese banking system. We find that the Vietnamese banking system operates in monopolistic competition with non-state owned commercial banks behaving more competitively than state owned commercial banks.

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  • Matousek, Roman & Nguyen, Thao Ngoc & Stewart, Chris, 2013. "Market structure in the banking sector: Evidence from a developing economy," Economics Discussion Papers 2013-1, School of Economics, Kingston University London.
  • Handle: RePEc:ris:kngedp:2013_001
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    File URL: http://eprints.kingston.ac.uk/25914/1/Stewart-C-25914.pdf
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    References listed on IDEAS

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    1. 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.
    2. Panzar, John C & Rosse, James N, 1987. "Testing for "Monopoly" Equilibrium," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 443-456, June.
    3. Stijn Claessens & Luc Laeven, 2004. "What drives bank competition? Some international evidence," Proceedings, Federal Reserve Bank of Cleveland, pages 563-592.
    4. Goddard, John & Wilson, John O.S., 2009. "Competition in banking: A disequilibrium approach," Journal of Banking & Finance, Elsevier, vol. 33(12), pages 2282-2292, December.
    5. Alli Nathan & Edwin H. Neave, 1989. "Competition and Contestability in Canada's Financial System: Empirical Results," Canadian Journal of Economics, Canadian Economics Association, vol. 22(3), pages 576-594, August.
    6. Shaffer, Sherrill, 2004. "Patterns of competition in banking," Journal of Economics and Business, Elsevier, vol. 56(4), pages 287-313.
    7. J.A. Bikker & L. Spierdijk, 2009. "Measuring and explaining competition in the financial sector," Working Papers 09-01, Utrecht School of Economics.
    8. De Bandt, Olivier & Davis, E. Philip, 2000. "Competition, contestability and market structure in European banking sectors on the eve of EMU," Journal of Banking & Finance, Elsevier, vol. 24(6), pages 1045-1066, June.
    9. Matthews, Kent & Murinde, Victor & Zhao, Tianshu, 2007. "Competitive conditions among the major British banks," Journal of Banking & Finance, Elsevier, vol. 31(7), pages 2025-2042, July.
    10. 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.
    11. Thao Ngoc Nguyen & Chris Stewart, 2013. "Concentration and efficiency in the Vietnamese banking system between 1999 and 2009: A structural model approach," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 21(3), pages 268-283, July.
    12. Lloyd-Williams, D. M. & Molyneux, Phil & Thornton, John, 1994. "Market structure and performance in Spanish banking," Journal of Banking & Finance, Elsevier, vol. 18(3), pages 433-443, May.
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    Cited by:

    1. Matousek, Roman & Nguyen, Thao Ngoc & Chris, Stewart, 2016. "Performance of the banking sector of a developing country: A non-structural model using the disequilibrium approach," Economics Discussion Papers 2016-2, School of Economics, Kingston University London.
    2. Carolina Laureti & Ariane Szafarz, 2012. "The Time-Inconsistency Factor: How Banks Adapt to their Mix of Savers," Working Papers CEB 12-035, ULB -- Universite Libre de Bruxelles.
    3. Carolina Laureti & Ariane Szafarz, 2014. "Having it Both Ways: A Theory of the Banking Firm with Time-Consistent and Time-Inconsistent Depositors," Working Papers CEB 14-011, ULB -- Universite Libre de Bruxelles.

    More about this item

    Keywords

    Banking; performance; Non-structural model; Vietnam;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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