Competition In Iran’s Banking Sector: Panzar-Rosse Approach

Farhad khodad Kashi (), Jamal Zarein Beynabadi and Yeghaneh Mosavi
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Farhad khodad Kashi: Department of Economics, Payame Noor University, Tehran, Iran.
Jamal Zarein Beynabadi: Department of Economics, Payame Noor University, Tehran, Iran.
Yeghaneh Mosavi: Department of Economics, Payame Noor University, Tehran, Iran.

Iranian Economic Review (IER), 2015, vol. 19, issue 1, 29-39

Abstract: The Iranian banking sector has undergone huge and substantial reform in the last decade; privatization, establishment of private banks and development of modern technologies (IT). This paper investigates the competitive condition of the Iranian banking industry over the period 2005-2010 using the H-statistic proposed by Panzar and Rosse. The properties of this non-structural methodology make it an excellent framework for assessing the degree of competition in the banking industry. To calculate H statistics, a reduced form of revenue equation was estimated. The calculated H statistics for the whole sample period was 0.7101.The extent of H statistics and the result of wald test indicate that the structure of Iranian Banking sector is neither monopoly nor competition. Our findings were in favor of monopolistic competition.

Keywords: Competition; Iranian Banking Industry; Market Structure; Panzar-Rosse. (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eut:journl:v:19:y:2015:i:1:p:29

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