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Testing for Competition in the South Korean and Chinese Commercial Banking Markets
Author(s) -
Park Kang H.
Publication year - 2013
Publication title -
asia‐pacific journal of financial studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.375
H-Index - 15
eISSN - 2041-6156
pISSN - 2041-9945
DOI - 10.1111/ajfs.12005
Subject(s) - competition (biology) , oligopoly , banking industry , statistic , sample (material) , business , market concentration , market share , monetary economics , industrial organization , economics , market structure , financial system , microeconomics , finance , statistics , cournot competition , mathematics , chemistry , ecology , chromatography , biology
This paper examines market concentration and competition in the S outh K orean and C hinese commercial banking markets for the period of 1992–2008. This study empirically investigates whether changes in bank concentration have affected the degree of competition in the K orean and C hinese commercial banking industries by estimating the H statistic of the P anzar‐ R osse model. We also used the B oone Indicator model to confirm the results from the P anzar‐ R osse model. The Korean banking industry has been monopolistically competitive for the entire sample period while the Wald test of the H statistic shows competition in the Korean banking actually increased to the level of perfect competition during the crisis period temporarily. Compared to the banking industry of K orea and other countries, the C hinese banking industry is still highly concentrated and its level of competition is closer to oligopoly.