Exploring competitiveness in banking sector of a small island economy: a study of Fiji

Ronald Kumar and Arvind Patel ()

Quality & Quantity: International Journal of Methodology, 2014, vol. 48, issue 6, 3169-3183

Abstract: The paper explores the competitiveness in the banking sector in Fiji using the Panzar and Rosse (J Ind Econ 35:443–456, 1987 ) method. We compute the concentration ratios and Herfindahl–Hirschman index based on total assets, loans, and deposits to examine the concentration level. To compute the Panzar-Rosse H-statistics, we use fixed effect regression method duly controlling for heterogeneity. The results show banks in Fiji exhibit monopolistic behavior and are biased towards monopoly/conjectural variation short-run oligopoly upon examining the significance level of the upper and lower bounds of the computed H-statistics. Moreover, the results also show that banks revenue are influenced positively by interest expenses, capital adequacy ratio, and the number of branches; and negatively by personnel expenses, other operating expenses, and firm size measured by total assets. Copyright Springer Science+Business Media Dordrecht 2014

Keywords: Competition; Banking; Developing countries; Empirical study; Fiji (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s11135-013-9948-8

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