Measuring the Level of Competition in the Loan Market of the Thai Banking Industry Using the Boone Indicator

Rungporn Roengpitya
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Rungporn Roengpitya: Bank of Thailand

No 2010-01, Working Papers from Monetary Policy Group, Bank of Thailand

Abstract: This paper follows the pioneer effort in measuring the competition level in the loan markets among selected countries in the European Union by van Leuvensteijn et al. (2007). In this study, the competition level in the loan market of the Thai banking industry is calculated both in aggregate of time and by year, from 1994-2004. In addition, for comparison purposes, I also re-assess the level of competition in the loan market of the U.S. banks, using the data from the CALL Report during the years 1994-2004, which is different from the original paper that uses the Bankscope data from 1999- 2004. The results indicate that the Thai banking industry is much less competitive when compared to the U.S. banking industry and bears higher marginal costs, which consequently translates to lower efficiency. Finally, it is worth noting that the method of estimating the translog cost function diverges from the EU paper in a sense that the states’ fixed effects are included in this study and that the marginal cost equation is estimated differently due to the use of a different marginal cost equation.

Pages: 26 pages
Date: 2010-01
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Citations: View citations in EconPapers (1)

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