Consolidation and Market Structure in Emerging Market Banking Systems
IMF Working Papers, November 1, 2002
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- Consolidation and Market Structure in Emerging Market Banking Systems
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Bibliographic details
- Authors: Gaston Gelos, Jorge Roldos
- Published: November 1, 2002
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451859478.001
Summary and key findings
- Examines the evolution of market structure in emerging market banking systems during the 1990s.
- Significant bank consolidation occurred, reflected in a sharp decline in the number of banks.
- Consolidation has not systematically been associated with increased concentration as measured by standard indices.
- 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, for example by allowing increased participation of foreign banks, appears to have prevented a decline in competitive pressures associated with consolidation.
Methodology and scope
- Time period analyzed: the 1990s.
- Econometric framework: Panzar-Rosse (1987) methodology.
- Geographic/sample scope: a sample of eight European and Latin American countries.
- Themes and concepts preserved from source: market structure, concentration indices, contestability, market power, HH indices, Panzar and Rosse methodology.
Policy implications and recommendations highlighted
- Policies lowering barriers to entry can offset potential declines in competitive pressures associated with bank consolidation.
- Increased participation of foreign banks is cited as an example of a policy that can maintain contestability in consolidated markets.
Content in this bundle
- Consolidation and Market Structure in Emerging Market Banking Systems - WP/02/186