A New Measure of Competition in Indian Loan Market

Jugnu Ansari ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study endeavours at measuring bank competition in Indian loan market using a new competitiveness index, the Augmented Relative Profit Difference (ARPD), which quantifies the impact of marginal costs on performance, measured in terms of market shares. This study yields two major insights. First, the theoretical foundation of the ARPD is very robust as compared to other conventional measures. Second, applying this unbiased competition indicator to Indian bank loan markets shows that financial reform indeed has contributed to significant improvements in competition. As regards, the competition among specific types of banks, we found public sector banks and private sector banks are comparatively more competitive than foreign banks. The empirical finding indicates that the Indian loan market is monopolistic in nature.

Keywords: Banking Industry; Competition; Loan market; Marginal Cost (search for similar items in EconPapers)
JEL-codes: D4 G21 L1 (search for similar items in EconPapers)
Date: 2012-01-06
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Citations: View citations in EconPapers (1)

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