Competition and Contestability in Central and Eastern European Banking Markets
Managerial Finance, Vol. 33, No. 3, 2007
Posted: 13 Mar 2007
This study analyzes the evolution of competitive conditions in the Banking industries of fourteen Central and Eastern European (CEE) transition economies using firm-level data for the period 1993-2000. The results of the competition analysis suggest that the banking markets of CEE countries cannot be characterized by the bipolar cases of either perfect competition or monopoly over 1993-2000 except for FYR of Macedonia and Slovakia. That is, banks earned their revenues as if operating under conditions of monopolistic competition in that period. Furthermore, the cross-sectional analysis of competitive structure reveals initially a decreasing trend between 1993 and 1996 and a subsequent increasing trend in competitive conditions after 1996. Large banks in transition countries operate in a relatively more competitive environment compared to small banks, or in other words, competition is lower in local markets compared to national and international markets.
Keywords: Banking, Bank Competition, Transition Economies
JEL Classification: P30, G21, D40
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