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Competition and market structure of the banking sector in Mexico

Author

Listed:
  • Tomás Gómez Rodríguez

    (Universidad Autónoma de Hidalgo, México)

  • Humberto Ríos Bolívar

    (Instituto Politécnico Nacional, México)

  • Adriana Zambrano Reyes

    (Universidad Autónoma de Hidalgo)

Abstract

The objective of this work is to evaluate the competition in the Mexican banking sector through two approaches: market concentration and power. Concentration indices and the Herfindahl-Hirschman index are used within the concentration measures. Two tools are used in the market power approach: the Lerner index and the H-statistic. To calculate the Lerner index, a simultaneous equations model is used, which is estimated with the generalized method of moments. On the other hand, a data panel estimated in first differences and fixed effects is used for the calculation of the H-statistic. A sample of 15 banks is used for the case of the market power approach, and of 32 banks for the concentration approach; both approaches are studied within the 2000-2012 period. It can be observed that within the concentration approach there is a decrease in the concentration indices, and therefore an increase in competition. The result obtained in the power market approach for the Lerner index and H-statistic is monopolistic competition.

Suggested Citation

  • Tomás Gómez Rodríguez & Humberto Ríos Bolívar & Adriana Zambrano Reyes, 2018. "Competition and market structure of the banking sector in Mexico," Contaduría y Administración, Accounting and Management, vol. 63(1), pages 5-6, Enero - M.
    • Handle: RePEc:nax:conyad:v:63:y:2018:i:1:p:5-6
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    market structure; competition; concentration.;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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