Competition and Contestability in Central and Eastern European Banking Markets

Managerial Finance, Vol. 33, No. 3, 2007

Posted: 13 Mar 2007

See all articles by H. Semih Yildirim

H. Semih Yildirim

York University - Atkinson School of Administrative Studies

George C. Philippatos

University of Tennessee, Knoxville - College of Business Administration

Abstract

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

Suggested Citation

Yildirim, H. Semih and Philippatos, George C., Competition and Contestability in Central and Eastern European Banking Markets. Managerial Finance, Vol. 33, No. 3, 2007. Available at SSRN: https://ssrn.com/abstract=969500 or http://dx.doi.org/10.2139/ssrn.302410

H. Semih Yildirim (Contact Author)

York University - Atkinson School of Administrative Studies ( email )

218 Atkinson Building
Toronto, Ontario M3J 1C4
Canada
+1 (416) 736-2100 Ext.224777 (Phone)
+1 (416) 736-5963 (Fax)

HOME PAGE: http://www.yorku.ca/yildirim/

George C. Philippatos

University of Tennessee, Knoxville - College of Business Administration ( email )

432 Stokely Management Center
Knoxville, TN 37996-0570
United States
(865) 974-1719 (Phone)

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