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A Framework for Analyzing Competition in the Banking Sector: An Application to the Case of Jordan

26 Pages Posted: 20 Apr 2016  

Asli Demirgüç-Kunt

World Bank - Development Research Group; World Bank

Maria Soledad Martinez Peria

International Monetary Fund (IMF)

Date Written: December 1, 2010

Abstract

This paper proposes a framework to analyze competition in the banking sector using Jordan as an example. In particular, the paper pursues a multi-pronged approach to analyze competition including (i) an examination of the extent to which the market is contestable (that is, has low barriers to bank entry and exit), (b) an evaluation of the behavior of bank spreads, and (iii) an assessment of non-structural and direct measures of bank competition such as the H-statistic and the Lerner Index. This approach provides a more comprehensive framework to examine competition in the banking sector, compared with the commonly used alternative of looking only at bank concentration figures. In the case of Jordan, the analysis indicates that although concentration has declined, competition in the country is low and has decreased over time.

Keywords: Banks & Banking Reform, Emerging Markets, Access to Finance, Debt Markets, Markets and Market Access

Suggested Citation

Demirgüç-Kunt, Asli and Martinez Peria, Maria Soledad, A Framework for Analyzing Competition in the Banking Sector: An Application to the Case of Jordan (December 1, 2010). World Bank Policy Research Working Paper No. 5499. Available at SSRN: https://ssrn.com/abstract=1726248

Asli Demirgüç-Kunt (Contact Author)

World Bank - Development Research Group ( email )

United States
202-473-7479 (Phone)
202-522-1155 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/ademirguckunt/

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Maria Soledad Martinez Peria

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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