MARKET POWER OF INDONESIAN BANKING | Zendy

Andi Fahmi Lubis | Zendy

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MARKET POWER OF INDONESIAN BANKING

Author(s) -

Andi Fahmi Lubis

Publication year - 2012

Publication title -

deleted journal

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.505

H-Index - 4

ISSN - 2460-9196

DOI - 10.21098/bemp.v14i3.403

Subject(s) - market power , oligopoly , lerner index , indonesian , market structure , profit (economics) , market concentration , degree (music) , economics , business , econometrics , microeconomics , cournot competition , linguistics , philosophy , physics , acoustics , monopoly

This study aimed to estimate the degree of market power exercised by commercial banks in the credit market in Indonesia. The model used to answer this study’s objective was the Bresnahan-Lau oligopoly model that uses structural equations to estimate the degree of market power. This model uses a very different approach than Structure-Conduct-Performance (SCP) paradigm commonly used in market power studies. Without using actual cost data and accounting profit, the Bresnahan-Lau model was able to estimate directly the degree of market power from the structural equations. The main result of this study showed that the degree of market power exercised by commercial banks in the credit market is relatively low; in other words, the degree of competition in the credit market in Indonesia is quite high. Keywords : market power, oligopoly, Bresnahan-Lau, structure, performance, conduct, SCP. JEL Classification : L13, G21

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