<abstract xmlns="http://www.w3.org/1999/xhtml"><p>Background: Competition in the banking industry has been an important topic in the scientific literature as researchers tried to assess the level of competition in the banking sector. Objectives: This paper has an aim to investigate the market structure and a long term equilibrium of the banking market in Bosnia and Herzegovina nationwide as well as on its constitutional entities as well as to evaluate the monopoly power of banks during the years 2008-2012. Methods/Approach: The paper is examining the market structure using the most frequently applied measures of concentration k-bank concentration ratio (CRk) and Herfindahl-Hirschman Index (HHI) as well as evaluating the monopoly power of banks by employing Panzar-Rosse “H-statistic”. Results: The empirical results using CRk and HHI show that Bosnia and Herzegovina banking market has a moderately concentrated market with a concentration decreasing trend. The Panzar-Rosse “H-statistic” suggests that banks in Bosnia and Herzegovina operate under monopoly or monopolistic competition depending on the market segment. Conclusions: Banks operating on the banking market in Bosnia and Herzegovina seem to be earning their total and interest revenues under monopoly or perfectly collusive oligopoly.</p></abstract>

Background: Competition in the banking industry has been an important topic in the scientific literature as researchers tried to assess the level of competition in the banking sector. Objectives: This paper has an aim to investigate the market structure and a long term equilibrium of the banking market in Bosnia and Herzegovina nationwide as well as on its constitutional entities as well as to evaluate the monopoly power of banks during the years 2008-2012. Methods/Approach: The paper is examining the market structure using the most frequently applied measures of concentration k-bank concentration ratio (CRk) and Herfindahl-Hirschman Index (HHI) as well as evaluating the monopoly power of banks by employing Panzar-Rosse “H-statistic”. Results: The empirical results using CRk and HHI show that Bosnia and Herzegovina banking market has a moderately concentrated market with a concentration decreasing trend. The Panzar-Rosse “H-statistic” suggests that banks in Bosnia and Herzegovina operate under monopoly or monopolistic competition depending on the market segment. Conclusions: Banks operating on the banking market in Bosnia and Herzegovina seem to be earning their total and interest revenues under monopoly or perfectly collusive oligopoly.

Banking Competition and Efficiency: Empirical Analysis on the Bosnia and Herzegovina Using Panzar-Rosse Model

University Sarajevo School of Science Technology, Faculty of Economics, Bosnia and Herzegovina

Business Systems Research Journal

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Background: Competition in the banking industry has been an important topic in the scientific literature as researchers tried to assess the level of...

Banking Competition and Efficiency: Empirical Analysis on the Bosnia and Herzegovina Using Panzar-Rosse Model

Article Category: Economic and Business Systems Research Articles

Published Online: May 09, 2015

Page range: 72 - 92

Received: Jul 26, 2014

Accepted: Feb 15, 2015

DOI: https://doi.org/10.1515/bsrj-2015-0005

© by Deni Memić

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.