Consolidation and Market Structure in Emerging Market Banking Systems
Posted: 2 Jan 2004
Abstract
This paper examines the evolution of market structure in emerging markets banking systems during the 1990s. While a significant process of bank consolidation has been taking place in these countries, reflected in a sharp decline in the number of banks, this process has not systematically been associated with increased concentration as measured by standard indices. Moreover, econometric estimates based on the Panzar-Rosse (1987) methodology suggest that, overall, markets have not become less competitive in a sample of eight European and Latin American countries. Lowering barriers to entry, such as allowing increased participation of foreign banks, appears to have prevented a decline in competitive pressures associated with consolidation.
Keywords: Banking, market structure, competition, emerging markets, Panzar and Rosse methodology, contestability
JEL Classification: G21, L13, L51
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