Intra-banking competition in Ecuador: new evidence using panel data approach
Purpose – Banks are institutions that inject money in the economy and help to boost it when there are problems in some markets, especially in productive sectors. In this way, analysing the competition in this sector is an important tool for policymakers as non-competitive behaviour could affect the...
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2020-12-01
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| Series: | Journal of Economics Finance and Administrative Science |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/JEFAS-05-2019-0081/full/pdf?title=intra-banking-competition-in-ecuador-new-evidence-using-panel-data-approach |
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| author | Javier Solano Segundo Camino-Mogro Grace Armijos-Bravo |
| author_facet | Javier Solano Segundo Camino-Mogro Grace Armijos-Bravo |
| author_sort | Javier Solano |
| collection | DOAJ |
| description | Purpose – Banks are institutions that inject money in the economy and help to boost it when there are problems in some markets, especially in productive sectors. In this way, analysing the competition in this sector is an important tool for policymakers as non-competitive behaviour could affect the financial system and economy. The purpose of this paper is to measure the degree of competition in the Ecuadorian private banking sector divided by size, from 2000 to 2015, using panel data collected by the official regulator institution. Design/methodology/approach – The authors applied the model proposed by Panzar and Rosse (1987) and its H-statistic using a reduced price and revenue equation estimated by pooled ordinary least squares, fixed effects, random effects, feasible generalised fixed effects and panel correction standard errors (PCSE). Findings – The authors show that given the presence of some problems in data such as heteroskedasticity and autocorrelation, the most appropriate technique is PCSE. The authors also found robust evidence supporting that large banks compete in a monopolistic market, small and medium-sized banks operate in monopolistic competition, and Ecuadorian small, medium-sized and large banks stay in long-run equilibrium. Originality/value – This paper contributes to the actual literature of competition degree in two ways. First, different from traditional papers, we do not control by size; so, we divided the analysis by size, because in Ecuador and also in many developing countries, bank’s competition is different for each group of size because the levels of liquidity, risk and other indicators are different from one group to another. Second, we show the robustness of the results using a scaled and unscaled equation, using many controls and using five methods to contrast the competition degree. |
| first_indexed | 2024-04-12T03:13:51Z |
| format | Article |
| id | doaj.art-0708b34dccef4970b0f84d8b974f3980 |
| institution | Directory Open Access Journal |
| issn | 2077-1886 2218-0648 |
| language | English |
| last_indexed | 2024-04-12T03:13:51Z |
| publishDate | 2020-12-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | Journal of Economics Finance and Administrative Science |
| spelling | doaj.art-0708b34dccef4970b0f84d8b974f39802022-12-22T03:50:14ZengEmerald PublishingJournal of Economics Finance and Administrative Science2077-18862218-06482020-12-01255029531910.1108/JEFAS-05-2019-0081647136Intra-banking competition in Ecuador: new evidence using panel data approachJavier Solano0Segundo Camino-Mogro1Grace Armijos-Bravo2Universidad Metropolitana, Sede Machala, EcuadorESAI Business School – Universidad Espíritu Santo, Samborondón, Ecuador; Ecuadorian Political Economy Lab (EPEL), Guayaquil, Ecuador and Dirección Nacional de Investigación y Estudios, Superintendencia de Compañías, Valores y Seguros, Guayaquil, EcuadorESAI Business School – Universidad Espíritu Santo, Samborondón, EcuadorPurpose – Banks are institutions that inject money in the economy and help to boost it when there are problems in some markets, especially in productive sectors. In this way, analysing the competition in this sector is an important tool for policymakers as non-competitive behaviour could affect the financial system and economy. The purpose of this paper is to measure the degree of competition in the Ecuadorian private banking sector divided by size, from 2000 to 2015, using panel data collected by the official regulator institution. Design/methodology/approach – The authors applied the model proposed by Panzar and Rosse (1987) and its H-statistic using a reduced price and revenue equation estimated by pooled ordinary least squares, fixed effects, random effects, feasible generalised fixed effects and panel correction standard errors (PCSE). Findings – The authors show that given the presence of some problems in data such as heteroskedasticity and autocorrelation, the most appropriate technique is PCSE. The authors also found robust evidence supporting that large banks compete in a monopolistic market, small and medium-sized banks operate in monopolistic competition, and Ecuadorian small, medium-sized and large banks stay in long-run equilibrium. Originality/value – This paper contributes to the actual literature of competition degree in two ways. First, different from traditional papers, we do not control by size; so, we divided the analysis by size, because in Ecuador and also in many developing countries, bank’s competition is different for each group of size because the levels of liquidity, risk and other indicators are different from one group to another. Second, we show the robustness of the results using a scaled and unscaled equation, using many controls and using five methods to contrast the competition degree.https://www.emerald.com/insight/content/doi/10.1108/JEFAS-05-2019-0081/full/pdf?title=intra-banking-competition-in-ecuador-new-evidence-using-panel-data-approachmarket concentrationcompetitionbanksg21l1d40l80 |
| spellingShingle | Javier Solano Segundo Camino-Mogro Grace Armijos-Bravo Intra-banking competition in Ecuador: new evidence using panel data approach Journal of Economics Finance and Administrative Science market concentration competition banks g21 l1 d40 l80 |
| title | Intra-banking competition in Ecuador: new evidence using panel data approach |
| title_full | Intra-banking competition in Ecuador: new evidence using panel data approach |
| title_fullStr | Intra-banking competition in Ecuador: new evidence using panel data approach |
| title_full_unstemmed | Intra-banking competition in Ecuador: new evidence using panel data approach |
| title_short | Intra-banking competition in Ecuador: new evidence using panel data approach |
| title_sort | intra banking competition in ecuador new evidence using panel data approach |
| topic | market concentration competition banks g21 l1 d40 l80 |
| url | https://www.emerald.com/insight/content/doi/10.1108/JEFAS-05-2019-0081/full/pdf?title=intra-banking-competition-in-ecuador-new-evidence-using-panel-data-approach |
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