BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 3/2010:
Market power in the Russian banking industry
Zuzana Fungacova ()
, Laura Solanko ()
and Laurent Weill
Abstract: The aim of this paper is to analyze bank competition in
Russia by measuring the market power of Russian banks and its determinants
over the period 2001-2007 with the Lerner index. Earlier studies on bank
competition have focused on developed countries whereas this paper
contributes to the analysis of bank competition in emerging markets. We
find that bank competition has only slightly improved during the period
studied. The mean Lerner index for Russian banks is of the same magnitude
as those observed in developed countries, which suggests that the Russian
banking industry is not plagued by weak competition. Furthermore, we find
no greater market power for state-controlled banks nor less market power
for foreign-owned banks. We would consequently qualify the procompetitive
role of foreign bank entry and privatization. Finally, our analysis of the
determinants of market power enables the identification of several factors
that influence competition, including market concentration and risk as well
as the nonlinear influence of size.
Keywords: market power; bank competition; Russia; (follow links to similar papers)
JEL-Codes: G21; P34; (follow links to similar papers)
27 pages, March 25, 2010
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