Effects Of Market Concentration On Profitability Among Commercial Banks In Bulgaria

Aleksandar Todorov ()

Business & Management Compass, 2015, issue 3, 44-54

Abstract: The paper at hand presents a theoretical and empirical analysis of the relationship between market concentration and profitability using the banking sector in Bulgaria as an example. The two main hypotheses of the study are derived from a theoretical framework based on a static model of oligopoly. The first hypothesis suggests that companies with a higher market shares are expected to be more profitable, while the second hypothesis suggests that industry profitability increases with an increase in market concentration, measured by the Herfindahl index. To test these two hypotheses an appropriate econometric model is proposed. The model is estimated using a balanced panel data for commercial banks in Bulgaria for the period 2008 to 2013.

Keywords: competition; market structure; banking industry (search for similar items in EconPapers)
JEL-codes: L13 (search for similar items in EconPapers)
Date: 2015
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