Concentration and Competition in the Domestic Credit Market

Monique de Abreu Azevedo and Ivan Ricardo Gartner

RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), 2020, vol. 24, issue 5, 380-399

Abstract: Context: the financial market has experienced sharp restructuring and mergers in recent decades. As banks expand the scope of their activities, they raise concerns about the impact on the sector's competitiveness. If the characteristics of the financial industry, which contribute to make the sector more concentrated, can make it less competitive, it implies assessing the relationship between concentration and competition. Objective: the general objective of this study is to promote diagnosis of the organization of the national credit market by calculating and analyzing concentration and competition indicators, between 2000 and 2019. Methods: to measure concentration, the Herfindahl-Hirschman and the Five Major Concentration Ratio indexes are used. The degree of competition is estimated via Lerner's econometric model applied to data displayed on a panel with accounting and financial information from financial institutions. Results: the results suggest that although the concentration has increased in the time frame considered, competitiveness has not deteriorated, reinforcing the argument of seminal references that concentration does not necessarily harm competition. Conclusion: in the absence of academic consensus, this work elucidates the relationship between concentration and competitiveness. Still, it gains relevance by pointing out the role of regulation and credit unions in increasing recent competition. The work thus becomes capable of supporting policies that promote contestability, such as initiatives that relax restrictions on the entry of non-banking institutions and financial technology companies.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://rac.anpad.org.br/index.php/rac/article/view/1398 (text/html)
http://rac.anpad.org.br/index.php/rac/article/download/1398 (application/pdf)

Related works:
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:abg:anprac:v:24:y:2020:i:5:1398

Access Statistics for this article

RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration) is currently edited by Marcelo de Souza Bispo

More articles in RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration) from ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração
Bibliographic data for series maintained by Information Technology of ANPAD ().