IDEAS home Printed from
   My bibliography  Save this paper

A Formal Test of Competition in the Banking Sector of Pakistan: An Application of PR-H Statistic


  • Mahmood ul Hasan Khan

    () (State Bank of Pakistan)

  • Muhammad Nadim Hanif

    () (State Bank of Pakistan)


This study explores competition in the banking sector of Pakistan in the context of transformation in its structure and business environment since the implementation of financial sector reforms in the country. Instead of relying on the changes in the market structure indicators (like concentration ratio), we employ widely used Panzar and Rosse H statistic as a formal test of competition. PR-H statistic is estimated by using a balanced panel data comprising 24 commercial banks operating in Pakistan from the year 1996 to 2015. The results suggest that the banking sector of Pakistan exhibits the characteristics of monopolistic and perfectly competitive market structures.

Suggested Citation

  • Mahmood ul Hasan Khan & Muhammad Nadim Hanif, 2017. "A Formal Test of Competition in the Banking Sector of Pakistan: An Application of PR-H Statistic," SBP Working Paper Series 91, State Bank of Pakistan, Research Department.
  • Handle: RePEc:sbp:wpaper:91

    Download full text from publisher

    File URL:
    File Function: First version, 2017
    Download Restriction: no

    More about this item


    Competition; Banking Market Structure; Panzar and Rosse H statistic;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sbp:wpaper:91. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Faisal Saleem). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.