Premium
Market structure and bank conduct in Lesotho
Author(s) -
Moshoeshoe Ramaele,
Thokoa Katleho
Publication year - 2021
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12288
Subject(s) - monopoly , oligopoly , banking industry , market structure , competition (biology) , agency (philosophy) , economics , welfare , market power , statistic , industrial organization , monetary economics , business , market economy , financial system , ecology , philosophy , epistemology , biology , statistics , mathematics
Lesotho's banking industry is highly concentrated and is perceived to be uncompetitive. However, high market concentration does not necessarily imply a lack of competition in the market. Until now, there is no evidence supporting the view that the industry is uncompetitive. Therefore, this paper uses monthly bank‐level data from 2013:10 to 2019:5, and employs the Panzar‐Rosse H ‐statistic and the Boone indicator to examine competition in Lesotho's banking industry. We find that the industry acts as a ‘monopoly’ or a ‘perfectly colluding oligopoly’. We, therefore, argue that policy makers should set up the long anticipated antitrust agency to oversee conduct in this industry, and all other industries to improve societal welfare.