Acta Univ. Agric. Silvic. Mendelianae Brun. 2011, 59(2), 299-306 | DOI: 10.11118/actaun201159020299

Estimation of the competitive conditions in the Czech banking sector

Daniel Stavárek, Iveta Řepková
Slezská univerzita v Opavě, Obchodně podnikatelská fakulta v Karviné, Katedra financí, Univerzitní náměstí 1934/3, 733 40 Karviná, Česká republika

The paper uses New Empirical Industrial Organization approach, especially Panzar-Rosse model to estimates the level of competition of the banking industry in the Czech Republic during the period 2001-2009. We apply Panzar-Rosse model to estimate H statistic for a panel of 15 banks, which represent almost 90 % of the market. This paper also measures and compares the degree of banking competition in two sub-periods, 2001-2005 and 2005-2009, in order to investigate development of the competitive structure of the Czech banking industry. We found that the market was in equilibrium during most of the estimation period, which is a necessary condition for sound evaluation of the competition level. While the market can be described as perfectly competitive in 2001-2005, the intensity of competition decreased after joining the EU in 2004 and the market can be characterized as one of monopolistic competition in 2005-2009. The monopolistic competition in the Czech banking market was also revealed if the full sample 2001-2009 is considered.

Keywords: Panzar-Rosse model, competition, banking sector, Czech Republic
Grants and funding:

Research behind this paper was supported by the Student Grant Competition of Silesian University within the project SGS 25/2010 'Financial integration in the EU and its effect on corporate sector'.

Received: December 17, 2010; Published: July 7, 2014  Show citation

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Stavárek, D., & Řepková, I. (2011). Estimation of the competitive conditions in the Czech banking sector. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 59(2), 299-306. doi: 10.11118/actaun201159020299
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