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Research Of Competition In Deposit Market Of Ukraine Based On The Panzar-Rosse Model

Author

Listed:
  • Iryna Didenko

    (Department of Banking, Ukrainian Academy of Banking, Ukraine)

  • Serhii Bohma

    (Department of Banking, Ukrainian Academy of Banking, Ukraine)

Abstract

The problem in an adequate assessment of the level of competition in the banking market has prompted researchers to search constantly some new methods. The most famous of them were later successfully adapted to the banking market, are a models of Bresnahan, Panzar-Rosse, Bertrand, Iwat, Monti-Klein-Modesto Barros and others. In Ukraine, the process of assessing the level of competition in the banking sector is very relevant, in line with the recent reforms of particular relevance and distribution. Regarding the domestic deposit market, there is a shortage of qualitative analysis of this issue, unlike foreign practice. Therefore this study we try to solve this problem. The key goal of researchers in this study is in a detailed analysis to identify the important factors which make influence on the allocated markets, in particular on lending and deposit rates. Based on these factors there could be implemented internal adjustment processes taking place in the markets. The purpose of the article is to determine the level of competition in the deposit market of Ukraine in 2006-2015 basing on nonstructural PanzarRosse model and identify key factors that affect this level. Methodology. To research the level of competition in the deposit market of Ukraine the Panzar-Rosse model was used, in which separate 11 models were built using the integrated tool “Multiple regression” in the software package of statistics analysis STATISTICA. The input data in the model was presented with the information on financial performance of Ukrainian banks during ten years from 01.01.2005 till 01.01.2015. Results of this research showed that in Ukrainian deposit market there is a monopolistic competition, as proved by the calculated values of H-statistics index. The year of 2008, in the context of the global economic crisis, was marked as an unbalanced period for deposit market of Ukraine. Practical implications. Knowing the current state of competition level in the market, a number of phenomena that occur in it can be explained and a number of effective measures for its control can be designed. Value/originality. In Ukraine, the process of assessing competition in the banking sector, in line with the recent reforms, is becoming more popular and relevant. As for the domestic deposit market, there is a shortage of qualitative analysis of this issue, unlike the foreign practice. So this research will help to solve the problem.

Suggested Citation

  • Iryna Didenko & Serhii Bohma, 2016. "Research Of Competition In Deposit Market Of Ukraine Based On The Panzar-Rosse Model," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 2(2).
    • Handle: RePEc:bal:journl:2256-0742:2016:2:2:7
    DOI: 10.30525/2256-0742/2016-2-2-48-54
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    References listed on IDEAS

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    1. Panzar, John C & Rosse, James N, 1987. "Testing for "Monopoly" Equilibrium," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 443-456, June.
    2. Shaffer, Sherrill, 1998. "The Winner's Curse in Banking," Journal of Financial Intermediation, Elsevier, vol. 7(4), pages 359-392, October.
    3. Barros, Fatima & Modesto, Leonor, 1999. "Portuguese banking sector: a mixed oligopoly?," International Journal of Industrial Organization, Elsevier, vol. 17(6), pages 869-886, August.
    4. Joe S. Bain, 1951. "Relation of Profit Rate to Industry Concentration: American Manufacturing, 1936–1940," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 65(3), pages 293-324.
    5. Altunbas, Y. & Gardener, E. P. M. & Molyneux, P. & Moore, B., 2001. "Efficiency in European banking," European Economic Review, Elsevier, vol. 45(10), pages 1931-1955, December.
    6. Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92.
    7. Xavier Vives, 2001. "Competition in the Changing World of Banking," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 17(4), pages 535-547.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    banking system; competition; deposit market; Panzar-Rosse model; H-Staistics Index;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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