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The Profit-Structure Relationship In The Turkish Banking Industry Using Direct Measures Of Efficiency

Adnan Kasman
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Adnan Kasman: Vanderbilt University, Department of Economics

Ege Academic Review, 2001, vol. 1, issue 1, 141-164

Abstract: This paper addresses the relationship between profit and market concentration for the individual banking market. We employ a new model developed by Berger (1995) to test four competing hypotheses for the Turkish banking industry over the years 1988 to 1996. The data suggest that there is no positive and statistically significiant relationship between market concentration and profitability. Therefore, market concentration in the Turkish banking industry had no role in explaining profitability during the same period. However, there is some evidence supporting the relative market power and efficient structure hypotheses if we exclude direct measures of inefficiency from the regression. When we include X-inefficiency and scale inefficiency measures, which are obtained by using stochastic cost frontier model, there is support for X- efficiency version of the efficientstructure hypothesis for Turkish banks.

JEL-codes: G21 (search for similar items in EconPapers)
Date: 2001
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