Economics at your fingertips  

Competition and market contestability of banks: Evidence from emerging financial market

Muntazir Hussain (), Zaheer Abbas () and Usman Bashir ()
Additional contact information
Muntazir Hussain: International Islamic University, Faculty of Management Sciences
Zaheer Abbas: International Islamic University, Faculty of Management Sciences
Usman Bashir: International Islamic University, Faculty of Management Sciences

EuroEconomica, 2014, issue 1(33), 67-79

Abstract: The study is an attempt to investigate the nature of competition and market contestability of 35 Pakistani banks for the period of 2007-2011 by employing Panzar and Rosse (PR-model). The test of competition overall sample (2007-2011) suggest that banks in Pakistan in state of monopolistic competition and market is in equilibrium. The sub sample (2007-2009) result of competition and equilibrium are similar as for sample period (2007-2011) suggesting that revenue produced during this period is state of monopolistic competition. Finally the results of sample period (2010-2011) suggest that banks in Pakistan are instate of perfect competition however, the market in not in long-run equilibrium. The results have interesting policy implications; it is suggested to encourage the foreign banks presence to improve the competitive condition of banking industry so that to ensure the exit and entrance of banks in the industry to increase the competition and produce the variety of product to improve banks performance and customer satisfaction.

Keywords: bank competition; market contestability; market equilibrium. (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link) (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:

Access Statistics for this article

More articles in EuroEconomica from Danubius University of Galati Contact information at EDIRC.
Series data maintained by Florian Nuta ().

Page updated 2017-09-29
Handle: RePEc:dug:journl:y:2014:i:1:p:67-79