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Consolidation and Market Structure in Emerging Market Banking Systems

R. Gaston Gelos and Jorge Roldos

No 2002/186, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the evolution of market structure in emerging market banking systems during the 1990s. While significant bank consolidation has been taking place in these countries, reflected in a sharp decline in the number of banks, this process has not systematically been associated with increased concentration as measured by standard indices. Moreover, econometric estimates based on the Panzar-Rosse (1987) methodology suggest that, overall, markets have not become less competitive in a sample of eight European and Latin American countries. Lowering barriers to entry, by doing such things as allowing increased participation of foreign banks, appears to have prevented a decline in competitive pressures associated with consolidation.

Keywords: WP; bank; private bank; HH indices; number; consolidation process; Banco de Chile; bank consolidation; bank penetration; market power; Emerging and frontier financial markets; Competition; Commercial banks; Foreign banks; State-owned banks; Europe; banking SystemsConsolidation; Banking; market structure; emerging markets; Panzar and Rosse methodology; contestability; Asia and Pacific (search for similar items in EconPapers)
Pages: 30
Date: 2002-11-01
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Handle: RePEc:imf:imfwpa:2002/186