Evolution of Banking Structure: Industrial Policy and Deregulation

This paper analyses the impact of various types o f deregulation on banking industry structure. The empirical result is supported by evidence from Japan and Korea, which have undergone a substantial consolidation following a series of deregulation. The analysis is applied to a unique d ata set of the entire commercial banking sector in Japan and Korea, which covers bot h pre- and post- banking crisis periods. The paper also draws attention to the role of banking sector in the East Asian industrialisation, which influenced its idiosyncrat ic banking regulation and the evolution of the banking structure using the struct ure-performance relationship.