Deregulation, Competition and Consumer Welfare in Banking Market: Evidence from Hong Kong

HKIMR Working Paper No. 24/2007

29 Pages Posted: 12 Feb 2008

See all articles by Chun-Yu Ho

Chun-Yu Ho

State University of New York (SUNY) - Department of Economics

Date Written: December 1, 2007

Abstract

This paper examines competition among commercial banks following deregulation in a small open economy. I jointly estimate a system of differentiated product demand and pricing equations, and use conduct parameters to identify market structure. The empirical results show that the banking sector is characterized by the Nash-Bertrand equilibrium in which bank size is important for product differentiation. Following deregulation, bank competition intensifies and cost efficiency improves.

Keywords: Banking, Conduct Parameters, Consumer Welfare, Demand, Deregulation, Hong Kong, Product Differentiation

JEL Classification: G21, L13

Suggested Citation

Ho, Chun-Yu, Deregulation, Competition and Consumer Welfare in Banking Market: Evidence from Hong Kong (December 1, 2007). HKIMR Working Paper No. 24/2007, Available at SSRN: https://ssrn.com/abstract=1091863 or http://dx.doi.org/10.2139/ssrn.1091863

Chun-Yu Ho (Contact Author)

State University of New York (SUNY) - Department of Economics ( email )

1400 Washington Ave
Albany, NY 12222
United States

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