DOI: 10.21637/GT.2012.3-4.05.

Concentration of the commercial banking market in Hungary


The most commonly applied model for measuring the intensity of competition in the banking market is the Panzar-Rosse (PR) model. This model helps to determine whether the market competition on a given market is monopolistic, oligopolistic or fair. The Panzar-Rosse model tends to determine H-statistic that summarizes the specific bank interest income (margin) on input price elasticity coefficients. H measures the degree of competition and it is the sum of the elasticity coefficients on factor prices of equilibrium interest income. The main advantage of H-statistic is that the indicator whose value lies between 0 and 1 reflects the degree of competition as a continuous variable. The closer the value is to 1, the stronger the competition is and vice versa. H-statistic’s data requirement is minor, its estimation is simple. These relationships were examined between 2005 and 2010 in Hungary.

KEYWORDS: bank, competition, degree of concentration

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