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Competition, Concentration and Foreign Capital in the Polish Banking Sector (Prior and During the Financial Crisis)

National Bank of Poland Working Paper No. 130

40 Pages Posted: 22 Dec 2012  

Malgorzata Pawlowska

National Bank of Poland

Date Written: December 3, 2012

Abstract

The aim of the study is to estimate the level of competition and concentration in the Polish banking sector in 1997-2009 (prior the financial crisis and during the crisis). In this paper the Panzar and Rosse model (P-R) and the Lerner index (LI) have been used for the evaluation of competition. Concentration in the Polish banking industry was analysed by using concentration indices (k bank concentration ratios (CR5) and the Herfindahl-Hirschman indices (HHI)).

Empirical analysis shows that the degree of competition in the Polish banking market in the period between 1997-2007 followed a slight upward trend. Results demonstrated also a slight decrease in competition in 2008-2009, caused by financial crisis. This results are confirmed by the Panzar and Rosse model (P-R) and the Lerner index (LI).

The same channels (prior the financial and during the crisis) which had an impact on changes in the competition of banking sectors in the euro zone countries, had an impact on the Polish banking sector due to the involvement of the capital from the euro zone. It might also mean that that increase of foreign participation stimulated competitive pressures. Furthermore, foreign capital was positively correlated with concentration indices.

Keywords: Competition, Concentration, Foreign Capital, Mergers and Acquisitions, Market structure, Panzar-Rosse Model, Lerner Index

JEL Classification: F36, G2, G21, G34, L1

Suggested Citation

Pawlowska, Malgorzata, Competition, Concentration and Foreign Capital in the Polish Banking Sector (Prior and During the Financial Crisis) (December 3, 2012). National Bank of Poland Working Paper No. 130. Available at SSRN: https://ssrn.com/abstract=2190857 or http://dx.doi.org/10.2139/ssrn.2190857

Malgorzata Pawlowska (Contact Author)

National Bank of Poland ( email )

00-919 Warsaw
Poland

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