## Consolidation and Market Structure in Emerging Market Banking Systems

_IMF Working Papers, November 1, 2002_

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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

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### 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.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/consolidation-and-market-structure-in-emerging-market-banking-systems-16129_