Exploring competitiveness in banking sector of a small island economy: a study of Fiji

Exploring competitiveness in banking sector of a small island economy: a study of Fiji The paper explores the competitiveness in the banking sector in Fiji using the Panzar and Rosse (J Ind Econ 35:443–456, 1987) method. We compute the concentration ratios and Herfindahl–Hirschman index based on total assets, loans, and deposits to examine the concentration level. To compute the Panzar-Rosse H-statistics, we use fixed effect regression method duly controlling for heterogeneity. The results show banks in Fiji exhibit monopolistic behavior and are biased towards monopoly/conjectural variation short-run oligopoly upon examining the significance level of the upper and lower bounds of the computed H-statistics. Moreover, the results also show that banks revenue are influenced positively by interest expenses, capital adequacy ratio, and the number of branches; and negatively by personnel expenses, other operating expenses, and firm size measured by total assets. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Quality & Quantity Springer Journals

Exploring competitiveness in banking sector of a small island economy: a study of Fiji

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Publisher
Springer Journals
Copyright
Copyright © 2013 by Springer Science+Business Media Dordrecht
Subject
Social Sciences, general; Methodology of the Social Sciences; Social Sciences, general
ISSN
0033-5177
eISSN
1573-7845
D.O.I.
10.1007/s11135-013-9948-8
Publisher site
See Article on Publisher Site

Abstract

The paper explores the competitiveness in the banking sector in Fiji using the Panzar and Rosse (J Ind Econ 35:443–456, 1987) method. We compute the concentration ratios and Herfindahl–Hirschman index based on total assets, loans, and deposits to examine the concentration level. To compute the Panzar-Rosse H-statistics, we use fixed effect regression method duly controlling for heterogeneity. The results show banks in Fiji exhibit monopolistic behavior and are biased towards monopoly/conjectural variation short-run oligopoly upon examining the significance level of the upper and lower bounds of the computed H-statistics. Moreover, the results also show that banks revenue are influenced positively by interest expenses, capital adequacy ratio, and the number of branches; and negatively by personnel expenses, other operating expenses, and firm size measured by total assets.

Journal

Quality & QuantitySpringer Journals

Published: Oct 29, 2013

References

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