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Analysis of Market Structure in IRAN’s Banking Industry

Zarif Honarvar, Ali | 2014

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 46132 (44)
  4. University: Sharif University of Technology
  5. Department: Management and Economics
  6. Advisor(s): Fatemi, Farshad; Nili, Farhad
  7. Abstract:
  8. This study aimed at using industrial organization approach for banks and the use of models of determining the market structure and the level of competition in Iran’s banking industry. Models of market structure determination are divided into two categories: structural models that are the same as calculation of concentration indices using market share and non-structural models that are the same as revenue-cost nature of economic enterprises. Structural models have been established based on two theories of structure-conduct-performance (SCP) and efficient structure (ES). The difference between these two perspectives depends on the good or bad nature of concentration in banking services market. In contrast, non-structural models have been developed based on the theoretical principles of microeconomics and are more powerful for assessing the competitiveness. In this study, we calculated Herfindahl-Hirschman, concentration of the top banks, entropy, comprehensive index of industrial concentration, Hall-Tideman and Rosenbluth indices to show that despite the high concentration of Iran’s banking industry, the concentration has a decreasing trend and competition has an increasing trend. Therefore, no difference can be found in market share by application of different definitions. Also, among non-structural models, because of the advantages of Panzar-Rosse model and using different specification of this model, H-statistic estimation indicated that Iran’s banking industry has a monopoly status. Also, the same statistic was calculated over time (2007 to 2013). Due to evidences of a negative relationship between profitability and size of banks and because of the variation of bank sizes in Iran, we used Quantile regression to determine the relationship between bank sizes and their performances. The results show that there is no significant relationship between size and performance in the banking industry of Iran (even separated based on the type of bank)
  9. Keywords:
  10. Banking ; Market Share ; Quantile Regression ; Industrial Organization ; Concentration Index ; Panzar-Rosse Model

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