IDEAS home Printed from https://ideas.repec.org/a/taf/rjapxx/v1y1996i2p233-251.html
   My bibliography  Save this article

An empirical test of the structure‐conduct‐performance paradigm in the Asian and Pacific basin countries

Author

Listed:
  • Abdur Chowdhury

Abstract

This paper tests the structure‐conduct‐performance paradigm in eighteen Asian and Pacific Basin countries. The results suggest that concentration in the banking markets in these countries lead to monopoly profits being earned and is a signal of collusive behaviour among the leading banks. Competitive imperfections allow banks to set prices that are less favourable to consumers thereby decreasing total consumer and producer surplus. This has important policy implications for merger activity. A further increase in concentration in the banking market in these countries will decrease the level of competition in the market. Regulatory actions, such as anti‐trust laws, are justified on efficiency grounds as well as for raising economic welfare.

Suggested Citation

  • Abdur Chowdhury, 1996. "An empirical test of the structure‐conduct‐performance paradigm in the Asian and Pacific basin countries," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 1(2), pages 233-251.
    • Handle: RePEc:taf:rjapxx:v:1:y:1996:i:2:p:233-251
    DOI: 10.1080/13547869608724588
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13547869608724588
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13547869608724588?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Osborne, D K & Wendel, Jeanne, 1981. "A Note on Concentration and Checking Account Prices," Journal of Finance, American Finance Association, vol. 36(1), pages 181-186, March.
    2. Shepherd, William G, 1972. "The Elements of Market Structure," The Review of Economics and Statistics, MIT Press, vol. 54(1), pages 25-37, February.
    3. Rhoades, Stephen A., 1985. "Market share as a source of market power: Implications and some evidence," Journal of Economics and Business, Elsevier, vol. 37(4), pages 343-363, December.
    4. Peltzman, Sam, 1977. "The Gains and Losses from Industrial Concentration," Journal of Law and Economics, University of Chicago Press, vol. 20(2), pages 229-263, October.
    5. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
    6. 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.
    7. Heggestad, Arnold A & Mingo, John J, 1977. "The Competitive Condition of U. S. Banking Markets and the Impact of Structural Reform," Journal of Finance, American Finance Association, vol. 32(3), pages 649-661, June.
    8. George J. Stigler, 1963. "Capital and Rates of Return in Manufacturing Industries," NBER Books, National Bureau of Economic Research, Inc, number stig63-1.
    9. Molyneux, Philip & Thornton, John, 1992. "Determinants of European bank profitability: A note," Journal of Banking & Finance, Elsevier, vol. 16(6), pages 1173-1178, December.
    10. George J. Stigler, 1963. "Errata Statement for "Capital and Rates of Return in Manufacturing Industries"," NBER Chapters, in: Capital and Rates of Return in Manufacturing Industries, pages 2-8, National Bureau of Economic Research, Inc.
    11. I. N. Fisher & G. R. Hall, 1969. "Risk and Corporate Rates of Return," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 83(1), pages 79-92.
    12. Cotterill, Ronald W, 1986. "Market Power in the Retail Food Industry: Evidence from Vermont," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 379-386, August.
    13. Lloyd-Williams, D. M. & Molyneux, Phil & Thornton, John, 1994. "Market structure and performance in Spanish banking," Journal of Banking & Finance, Elsevier, vol. 18(3), pages 433-443, May.
    14. Short, Brock K., 1979. "The relation between commercial bank profit rates and banking concentration in Canada, Western Europe, and Japan," Journal of Banking & Finance, Elsevier, vol. 3(3), pages 209-219, September.
    15. Smirlock, Michael, 1985. "Evidence on the (Non) Relationship between Concentration and Profitability in Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 17(1), pages 69-83, February.
    16. Bourke, Philip, 1989. "Concentration and other determinants of bank profitability in Europe, North America and Australia," Journal of Banking & Finance, Elsevier, vol. 13(1), pages 65-79, March.
    17. Brozen, Yale, 1971. "Bain's Concentration and Rates of Return Revisited," Journal of Law and Economics, University of Chicago Press, vol. 14(2), pages 351-370, October.
    18. Edwards, Franklin R, 1977. "Managerial Objectives in Regulated Industries: Expense-Preference Behavior in Banking," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 147-162, February.
    19. Gilbert, R Alton, 1984. "Bank Market Structure and Competition: A Survey," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 16(4), pages 617-644, November.
    20. George J. Stigler, 1963. "Front matter, "Capital and Rates of Return in Manufacturing Industries" including Preface," NBER Chapters, in: Capital and Rates of Return in Manufacturing Industries, pages -21--9, National Bureau of Economic Research, Inc.
    21. George J. Stigler, 1963. "Introduction to "Capital and Rates of Return in Manufacturing Industries"," NBER Chapters, in: Capital and Rates of Return in Manufacturing Industries, pages 3-10, National Bureau of Economic Research, Inc.
    22. Rhoades, Stephen A., 1982. "Welfare loss, redistribution effect, and restriction of output due to monopoly in banking," Journal of Monetary Economics, Elsevier, vol. 9(3), pages 375-387.
    23. Ravenscraft, David J, 1983. "Structure-Profit Relationships at the Line of Business and Industry Level," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 22-31, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Abdur Chowdhury, 2003. "Information technology and productivity payoff in the banking industry: evidence from the emerging markets," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(6), pages 693-708.
    2. Vladimir Njegomir & Dragan Stojic & Dragan Markovic, 2011. "Liberalisation, Market Concentration And Performance In The Non-Life Insurance Industry Of Ex-Yugoslavia," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 20(1), pages 21-40, june.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Khan, Habib Hussain & Ahmad, Rubi Binti & Chan, Sok Gee, 2018. "Market structure, bank conduct and bank performance: Evidence from ASEAN," Journal of Policy Modeling, Elsevier, vol. 40(5), pages 934-958.
    2. Neuberger, Doris, 1997. "Structure, Conduct and Performance in Banking Markets," Thuenen-Series of Applied Economic Theory 12, University of Rostock, Institute of Economics.
    3. Doris Neu Berger, 1998. "Industrial Organization of Banking: A Review," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 5(1), pages 97-118.
    4. Michael Salinger, 1990. "The Concentration-Margins Relationship Reconsidered," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1990 Micr), pages 287-335.
    5. Wenyi Chu & Chien-Nan Chen & Chuang-Hung Wang, 2008. "The market share--profitability relationships in the securities industry," The Service Industries Journal, Taylor & Francis Journals, vol. 28(6), pages 813-826, July.
    6. Tan, Yong, 2017. "The impacts of competition and shadow banking on profitability: Evidence from the Chinese banking industry," The North American Journal of Economics and Finance, Elsevier, vol. 42(C), pages 89-106.
    7. Samad, Abdus, 2008. "Market structure, conduct and performance: Evidence from the Bangladesh banking industry," Journal of Asian Economics, Elsevier, vol. 19(2), pages 181-193, April.
    8. Outreville, 2015. "The market structure-performance relationship applied to the Canadian wine industry," Applied Economics Letters, Taylor & Francis Journals, vol. 22(18), pages 1486-1492, December.
    9. Khan, Habib Hussain & Kutan, Ali M. & Naz, Iram & Qureshi, Fiza, 2017. "Efficiency, growth and market power in the banking industry: New approach to efficient structure hypothesis," The North American Journal of Economics and Finance, Elsevier, vol. 42(C), pages 531-545.
    10. Liu, Yong-Chin & Hung, Jung-Hua, 2006. "Services and the long-term profitability in Taiwan's banks," Global Finance Journal, Elsevier, vol. 17(2), pages 177-191, December.
    11. Pankaj Sinha & Sakshi Sharma, 2016. "Determinants of bank profits and its persistence in Indian Banks: a study in a dynamic panel data framework," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 7(1), pages 35-46, March.
    12. Ruyun (Ivy) Feng & Michael D. Kimbrough & Sijing Wei, 2022. "The role of information transparency in the product market: an examination of the sustainability of profitability differences," Review of Accounting Studies, Springer, vol. 27(2), pages 668-705, June.
    13. Patricia M. Fairfield & Sundaresh Ramnath & Teri Lombardi Yohn, 2009. "Do Industry‐Level Analyses Improve Forecasts of Financial Performance?," Journal of Accounting Research, Wiley Blackwell, vol. 47(1), pages 147-178, March.
    14. Naceur, Sami Ben & Omran, Mohammed, 2011. "The effects of bank regulations, competition, and financial reforms on banks' performance," Emerging Markets Review, Elsevier, vol. 12(1), pages 1-20, March.
    15. Denizer, Cevdet, 1997. "The effects of financial liberalization and new bank entry on market structure and competition in Turkey," Policy Research Working Paper Series 1839, The World Bank.
    16. Tan, Yong, 2016. "The impacts of risk and competition on bank profitability in China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 40(C), pages 85-110.
    17. Jordan Kjosevski & Mihail Petkovski, 2017. "Determinants of Bank Profitability in the Republic of Macedonia – a Panel Data Analysis," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 41-65.
    18. Panayiotis P. Athanasoglou & Matthaios D. Delis & Christos K. Staikouras, 2006. "Determinants of Bank Profitability in the South Eastern European Region," Working Papers 47, Bank of Greece.
    19. Nat Pope & Yu‐Luen Ma, 2008. "The Market Structure–Performance Relationship in the International Insurance Sector," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(4), pages 947-966, December.
    20. Senarathne Chamil W. & Long Wei, 2019. "Industry Competition and Common Stock Returns," Management Sciences. Nauki o Zarządzaniu, Sciendo, vol. 24(3), pages 24-35, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:rjapxx:v:1:y:1996:i:2:p:233-251. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rjap .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.