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Revisit the Market Share Effect in Banking industry—the use of Cross Country data

Journal of Financial Studies

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Title Revisit the Market Share Effect in Banking industry—the use of Cross Country data
 
Creator Chung-Hua Shen
Meng-Wen Wu
 
Description This paper investigates the effects of bank market share on bank profit, which is referred to as the market share effects, using 3168 banks from 44 countries. Previous empirical studies which used single countries to probe the same issue have not reached consensus results. We resolve this puzzle by considering five conditional variables, which are Structure (bank concentration ratio), Efficiency (cost/income), Regulation (restriction on bank activities and entry barriers), Governance (investor protection, creditor protection and law efficiency) and Income (GDP per capita). This study proposes that in countries with concentrated market structure, strong operating efficiency and good governance structure, positive market share effect tends to be enhanced while negative market share effect tends to be mitigated. The opposite is true for countries with less market concentration, poor operating efficiency and weak governance structure. Our evidence also indicates positive market share effect for entry barriers, but not for banking restrictions. Finally, GDP per capita is not associated with market share effect in any significant way.
Key words：Bank, Market share, Concentration, Efficiency, Restriction, Entry barrier, Governance, Country income
 
Publisher Journal of Financial Studies
財務金èžå­¸åˆŠ
 
Date 2011-03-10
 
Type —
 
Format application/pdf
 
Identifier http://www.jfs.org.tw/index.php/jfs/article/view/2011041
 
Source Journal of Financial Studies; Vol 18, No 1 (2010); 1
財務金èžå­¸åˆŠ; Vol 18, No 1 (2010); 1
 
Language —