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Testing the structure-conduct-performance relationship for ASEAN: Addressing the issues in the panel mediation

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  • Khan, Habib Hussain
  • Kutan, Ali M.

Abstract

We test the structure-conduct-performance (SCP) hypothesis for ASEAN, which predicts that the concentrated markets allow banks to collude and earn higher profits through monopoly pricing. We propose a new estimation approach that corrects the methodological issues in previous studies by including lags of explanatory variables and autoregressive terms in estimated models. The estimation results imply that the banks’ profitability in a concentrated market is entirely attributable to the anti-competitive behavior of banks. From a theoretical perspective, the findings exclude the alternative explanations – i.e. the efficient structure (ES) hypothesis or the relative market (RMP) hypothesis – for the SCP relationship in ASEAN.

Suggested Citation

  • Khan, Habib Hussain & Kutan, Ali M., 2021. "Testing the structure-conduct-performance relationship for ASEAN: Addressing the issues in the panel mediation," Journal of Asian Economics, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:asieco:v:72:y:2021:i:c:s1049007820301494
    DOI: 10.1016/j.asieco.2020.101269
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    Cited by:

    1. Hussain Khan, Habib & Kutan, Ali M., 2023. "Banking sector competition and firms’ financial constraints: Firm-Level evidence from developing economies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 88(C).
    2. Ariel Herbert Fambeu, 2024. "Export Performance Under Imperfect Competition: Evidence from Manufacturing Firms in Cameroon," Journal of Industry, Competition and Trade, Springer, vol. 24(1), pages 1-18, December.

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    More about this item

    Keywords

    Mediation analysis; Market structure; Conduct; Performance; Longitudinal data;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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