Competition in the Financial Sector: Overview of Competition Policies

Author/Editor:

Stijn Claessens

Publication Date:

March 1, 2009

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

As in other sectors, competition in finance matters for allocative, productive and dynamic efficiency. Theory suggests, however, that unfettered competition is not first best given the special features of finance. I review these analytics and describe how to assess the degree of competition in markets for financial services. Existing research shows that the degree of competition greatly varies across markets, largely driven by barriers to entry and exit. I argue that changes in financial services industries require updated competition policies and institutional arrangements, but that practices still fall short. Furthermore, I show that developing countries face some specific competition challenges.

Series:

Working Paper No. 2009/045

Subject:

Banking Commercial banks Competition Economic sectors Financial institutions Financial markets Financial sector Financial services Foreign banks

English

Publication Date:

March 1, 2009

ISBN/ISSN:

9781451871937/1018-5941

Stock No:

WPIEA2009045

Pages:

20

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