Does higher bank concentration reduce the level of competition in the banking industry? Further evidence from South East Asian economies

The level of bank concentration has increased significantly in the Association of South East Asian Nations (ASEAN) due to structural reforms undertaken in the banking sector, raising concerns about its potential negative impact on bank performance. In this paper, we empirically test the impact of ba...

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Bibliographic Details
Published in:International review of economics & finance 2017-11, Vol.52, p.91-106
Main Authors: Khan, Habib Hussain, Kutan, Ali M., Ahmad, Rubi Binti, Gee, Chan Sok
Format: Article
Language:English
Subjects:
Banking
Boone indicator
Competition
Concentration
Lerner index
Panzar-rosse H-Statistic
Reforms
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Summary:The level of bank concentration has increased significantly in the Association of South East Asian Nations (ASEAN) due to structural reforms undertaken in the banking sector, raising concerns about its potential negative impact on bank performance. In this paper, we empirically test the impact of bank concentration on competition in ASEAN using several indicators. The evidence indicates that the increase in the level of concentration has reduced bank competition and this finding is robust to employing several alternative measures of concentration and competition and empirical models. We discuss the policy implications of the findings.
ISSN:1059-0560
1873-8036
DOI:10.1016/j.iref.2017.09.006