Testing for Collusion in the Hong Kong Banking Sector

Jim Wong (), Eric Wong (), Tom Fong () and Ka-fai Choi
Additional contact information
Jim Wong: Research Department, Hong Kong Monetary Authority
Eric Wong: Research Department, Hong Kong Monetary Authority
Ka-fai Choi: Research Department, Hong Kong Monetary Authority

No 701, Working Papers from Hong Kong Monetary Authority

Abstract: This working paper examines the degree of collusion in the banking sector of Hong Kong based on the conjectural variation approach. The results suggest that banks in Hong Kong operated in a competitive fashion in the loan market during the period 1991-2002 with no significant sign of collusion on pricing. The market conduct was largely maintained in subsequent years, despite significant changes in the operating conditions. While major bank consolidations in 2001-2002 have resulted in fewer banks and thus a market more conducive to develop and maintain collusions, interest rate deregulations implemented around the same time has promoted a more competitive environment. The estimation results show that while banks do not appear to have exercised any collusive pricing in either the retail market or the corporate loan market, it is relatively less likely to develop oligopolistic collusions in the corporate loan market than in the local retail market.

Keywords: Conjectural variation; price; Hong Kong banking; market structure (search for similar items in EconPapers)
JEL-codes: G21 G28 L13 L22 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2007-02
New Economics Papers: this item is included in nep-ban and nep-com
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.info.gov.hk/hkma/eng/research/working/pdf/HKMAWP07_01_full.pdf (application/pdf)

Related works:
Chapter: Testing for Collusion in the Hong Kong Banking Sector (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hkg:wpaper:0701

Access Statistics for this paper

More papers in Working Papers from Hong Kong Monetary Authority Contact information at EDIRC.
Bibliographic data for series maintained by Simon Chan ( this e-mail address is bad, please contact ).