Estimation of the banking sector competition in the CEE countries: The Panzar-Rosse approach
Competitive conditions in the banking sectors in the light of transition process in the Central and Eastern Europe countries (CEE) has been subject of interest for researchers and policy-makers, especially upon entry of foreign banks and concentrated markets. In this paper the Panzar-Rosse approa...
| Main Authors: | , |
|---|---|
| Format: | Article |
| Language: | deu |
| Published: |
Faculty of Economics University of Rijeka
2017-12-01
|
| Series: | Zbornik radova Ekonomskog fakulteta u Rijeci : časopis za ekonomsku teoriju i praksu |
| Subjects: | |
| Online Access: | https://www.efri.uniri.hr/sites/efri.uniri.hr/files/cr-collections/2/03-mustafa-toci-2017-2-1513970583.pdf |
| _version_ | 1818437420006244352 |
|---|---|
| author | Arben Mustafa Valentin Toçi |
| author_facet | Arben Mustafa Valentin Toçi |
| author_sort | Arben Mustafa |
| collection | DOAJ |
| description | Competitive conditions in the banking sectors in the light of transition process in the
Central and Eastern Europe countries (CEE) has been subject of interest for
researchers and policy-makers, especially upon entry of foreign banks and
concentrated markets. In this paper the Panzar-Rosse approach is used to assess
competition of banking sectors in CEE. By using General Method of Moments on the
panel data for 300 banks for the period 1999-2009, empirical evidence indicates that
banks operating in the CEE exert monopoly behaviour. From the methodological
point of view, the findings suggest that using a price equation or controlling for total
assets in a Panzar-Rosse approach produces upwards biased and invalid estimates
of the H-statistic. Therefore, further support is provided for maintaining a reducedform
revenue equation when estimating a Panzar-Rosse model. The findings also
suggest that banks operating in the non-EU countries of the CEE region have exerted
stronger market power compared to the banks operating in the EU countries of this
region. Policy-makers should improve competitive conditions and general ‘enabling’
environment for the banking sectors, especially the non-EU countries of the CEE
region, while balancing competition-stability trade-off. |
| first_indexed | 2024-12-14T17:24:23Z |
| format | Article |
| id | doaj.art-0b024dd81b06444c9dc51af8c491369e |
| institution | Directory Open Access Journal |
| issn | 1331-8004 1846-7520 |
| language | deu |
| last_indexed | 2024-12-14T17:24:23Z |
| publishDate | 2017-12-01 |
| publisher | Faculty of Economics University of Rijeka |
| record_format | Article |
| series | Zbornik radova Ekonomskog fakulteta u Rijeci : časopis za ekonomsku teoriju i praksu |
| spelling | doaj.art-0b024dd81b06444c9dc51af8c491369e2022-12-21T22:53:15ZdeuFaculty of Economics University of RijekaZbornik radova Ekonomskog fakulteta u Rijeci : časopis za ekonomsku teoriju i praksu1331-80041846-75202017-12-0135245948510.18045/zbefri.2017.2.459Estimation of the banking sector competition in the CEE countries: The Panzar-Rosse approachArben Mustafa0Valentin Toçi1Assistant Professor, University “Kadri Zeka” Gjilan, Faculty of Economics, 60000 Gjilan,Republic of Kosovo and CERGE-EI Teaching Career Integration FellowAssociate Professor, University of Prishtina “Hasan Prishtina”, Faculty of Economics, 10000Prishtina, Republic of KosovoCompetitive conditions in the banking sectors in the light of transition process in the Central and Eastern Europe countries (CEE) has been subject of interest for researchers and policy-makers, especially upon entry of foreign banks and concentrated markets. In this paper the Panzar-Rosse approach is used to assess competition of banking sectors in CEE. By using General Method of Moments on the panel data for 300 banks for the period 1999-2009, empirical evidence indicates that banks operating in the CEE exert monopoly behaviour. From the methodological point of view, the findings suggest that using a price equation or controlling for total assets in a Panzar-Rosse approach produces upwards biased and invalid estimates of the H-statistic. Therefore, further support is provided for maintaining a reducedform revenue equation when estimating a Panzar-Rosse model. The findings also suggest that banks operating in the non-EU countries of the CEE region have exerted stronger market power compared to the banks operating in the EU countries of this region. Policy-makers should improve competitive conditions and general ‘enabling’ environment for the banking sectors, especially the non-EU countries of the CEE region, while balancing competition-stability trade-off.https://www.efri.uniri.hr/sites/efri.uniri.hr/files/cr-collections/2/03-mustafa-toci-2017-2-1513970583.pdfbankscompetitionPanzar-Rosse approachCentral and Eastern Europe |
| spellingShingle | Arben Mustafa Valentin Toçi Estimation of the banking sector competition in the CEE countries: The Panzar-Rosse approach Zbornik radova Ekonomskog fakulteta u Rijeci : časopis za ekonomsku teoriju i praksu banks competition Panzar-Rosse approach Central and Eastern Europe |
| title | Estimation of the banking sector competition in the CEE countries: The Panzar-Rosse approach |
| title_full | Estimation of the banking sector competition in the CEE countries: The Panzar-Rosse approach |
| title_fullStr | Estimation of the banking sector competition in the CEE countries: The Panzar-Rosse approach |
| title_full_unstemmed | Estimation of the banking sector competition in the CEE countries: The Panzar-Rosse approach |
| title_short | Estimation of the banking sector competition in the CEE countries: The Panzar-Rosse approach |
| title_sort | estimation of the banking sector competition in the cee countries the panzar rosse approach |
| topic | banks competition Panzar-Rosse approach Central and Eastern Europe |
| url | https://www.efri.uniri.hr/sites/efri.uniri.hr/files/cr-collections/2/03-mustafa-toci-2017-2-1513970583.pdf |
| work_keys_str_mv | AT arbenmustafa estimationofthebankingsectorcompetitionintheceecountriesthepanzarrosseapproach AT valentintoci estimationofthebankingsectorcompetitionintheceecountriesthepanzarrosseapproach |