An Analysis of Degree of Competition in Banking Sector of Pakistan through a Direct Measure of Market Contestability

Mahmood ul Hasan Khan ()

SBP Research Bulletin, 2009, vol. 5, 35-52

Abstract: This paper measures the degree of competition in the banking sector of Pakistan by using structural approach developed by Panzar and Rosse (PR) in context of market contestability. A reduced form revenue equation is estimated by using panel data of 26 banks. The sample period is from 1997 to 2007. Various tests on PR-H Statistics suggest that banking sector of Pakistan, as a whole, is consistent with a monopolistically competitive market structure. Failure to reject the null of long-run equilibrium of the banking sector, a key assumption of PR-H Statistic, lends more credence to the finding of underlying degree of competition

Keywords: concentration; competition; market contestability; banking system (search for similar items in EconPapers)
JEL-codes: D4 G21 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (2)

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