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Book part
Publication date: 29 December 2016

Hanh Thi My Phan and Kevin Daly

This study aims to investigate both market concentration and bank competition of banking across six emerging Asian countries (e.g., Bangladesh, Indonesia, India…

Abstract

This study aims to investigate both market concentration and bank competition of banking across six emerging Asian countries (e.g., Bangladesh, Indonesia, India, Philippines, Malaysia, and Vietnam) over pre and post the 2008 global financial crisis. The conduct parameter approach following the framework suggested by Uchida and Tsutsui (2005) is used to estimate bank competition in these countries. The study employs both seemingly unrelated regression (SUR) and three-stage least squares (3SLS) to estimate simultaneously the system of equations in our model. Generally we find a negative association between market concentration and bank competition across most of the countries in the study suggesting that banks in concentrated markets collude to generate higher profits. Monopolistic competition was the best description of competitive structure of banking across the majority of countries investigated by this study. The study fills the gap in the banking literature by investigating bank competition, concentration, and their relationship across emerging Asian economies over the 2008 global financial crisis. Moreover, several policy implications for banking industry are suggested.

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Risk Management in Emerging Markets
Type: Book
ISBN: 978-1-78635-451-8

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Article
Publication date: 1 February 1993

S. Ade Olusoga

Investigates the influence of market concentration, marketdiversification and internationalization strategies on the performanceof multinational enterprises (MNEs). Using…

Abstract

Investigates the influence of market concentration, market diversification and internationalization strategies on the performance of multinational enterprises (MNEs). Using a sample of 450 large, medium and small MNEs, and three alternative definitions of market concentration and market diversification, results indicate that market diversification strategy produces better performance results for MNEs than market concentration strategy. In addition, MNEs using market concentration‐low internationalization strategy performed better than those using market concentration‐high internationalization strategy, and MNEs using market diversification‐low internationalization strategy performed better than those using market diversification‐high internationalization strategy. Discusses implications of the study′s findings for improved MNE performance.

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International Marketing Review, vol. 10 no. 2
Type: Research Article
ISSN: 0265-1335

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Article
Publication date: 16 December 2019

Yasin Mahmood, Maqsood Ahmad, Faisal Rizwan and Abdul Rashid

The purpose of this paper is to investigate the role of banking sector concentration, banking sector development and equity market development in corporate financial…

Abstract

Purpose

The purpose of this paper is to investigate the role of banking sector concentration, banking sector development and equity market development in corporate financial flexibility (FF).

Design/methodology/approach

The study used annual data for the period from 1991 to 2014 to examine the relationship between banking sector concentration, banking sector development, equity market development and corporate FF; hypotheses were tested using an unbalanced panel logistic regression model.

Findings

The paper provides empirical insights into the relationships between macroeconomic factors and corporate FF. The results suggest a substantial change in FF across firms; banking sector concentration discourages firms from borrowing, leading to the reduction of corporate borrowing, consequently an increase in FF can be observed. Banking sector development facilitates debt financing, hence reducing FF. Equity market development also has a positive impact on FF, as it is a substitute for debt financing.

Practical implications

The banking sector is an important provider of capital to business entities. A concentrated banking system discourages the provision of capital to firms; hence regulators have to take appropriate measures to resolve the problem of a reduced supply of capital. Banking sector development facilitates the provision of capital; further development may reduce bank lending rates to firms. Equity market development positively affects FF; hence, firm managers can use equity financing to resume FF. By following pecking order theory, managers use internal sources to finance value-maximizing investment projects, debt and issue shares as the last choice to get financing. When borrowing capacity is depleted, managers can obtain further funds by issuing stocks.

Originality/value

FF is an emergent area of research in advanced countries, while in developing economies, it is in the initial stages. Little work is available in this area to find the impact of banking sector concentration, banking sector development and equity market development, therefore, this study fills this gap in the existing literature.

Details

South Asian Journal of Business Studies, vol. 9 no. 1
Type: Research Article
ISSN: 2398-628X

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Article
Publication date: 1 September 2003

Vivien Beattie, Alan Goodacre and Stella Fearnley

While concentration measures are a good indicator of market structure, the link with competitivenessis more complex than often assumed. In particular, the modern theory of…

Abstract

While concentration measures are a good indicator of market structure, the link with competitiveness is more complex than often assumed. In particular, the modern theory of industrial organisation makes no clear statement regarding the impact of concentration on competition ‐ the focus of this paper is concentration and no inferences are made about competitive aspects of the market. The extent and nature of concentration within the UK listed company audit market as at April, 2002 and, pro forma, after the collapse of Andersen is documented and analysed in detail (by firm, market segment and industry sector). The largest four firms held 90 per cent of the market (based on audit fees) in 2002, rising to 96 per cent with the demise of Andersen. A single firm, Pricewaterhouse‐Coopers, held 70 per cent or more of the share of six out of 38 industry sectors, with a share of 50 per cent up to 70 per cent in a further seven sectors. The provision of non‐audit services (NAS) by incumbent auditors is also considered. As at April 2002, the average ratio of non‐audit fees (paid to auditor) to audit fees was 208 per cent, and exceeded 300 per cent in seven sectors. It is likely, however, that disposals by firms of their management consultancy and outsource firms, combined with the impact of the Smith Report on audit committees will serve to reduce these ratios. Another finding is that audit firms with expertise in a particular sector appeared to earn significantly higher nonaudit fees from their audit clients in that sector. The paper thus provides a solid empirical basis for debate. The subsequent discussion considers the implications for companies and audit firms of the high level of concentration in the current regulatory climate, where no direct regulatory intervention is planned.

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Journal of Financial Regulation and Compliance, vol. 11 no. 3
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 1 January 2006

Francisco J. Mas, Juan L. Nicolau and Felipe Ruiz

The purpose of this study is to examine the impact on firm performance of foreign concentration vs diversification strategies, as well as the moderating role played by…

Abstract

Purpose

The purpose of this study is to examine the impact on firm performance of foreign concentration vs diversification strategies, as well as the moderating role played by market, product and firm characteristics.

Design/methodology/approach

Moderated regression analysis is used.

Findings

Distribution and cultural distance (CU) moderate the relationship between foreign concentration‐diversification and stock market performance; while the non‐repetitive character of product purchase moderates the relationship at an accounting performance level.

Research limitations/implications

First, the lack of information prevented us from examining other groups of determining factors. Second, the possible existence of bias in the results due to the selection of stock market quoted firms.

Practical implications

Managers must realise that CU, distribution channel, and the product factor of non‐repeat purchase, play an important role in the choice of a concentration vs diversification strategy when explaining business results. Government authorities should develop training programmes for firms located in middle‐income countries in order to detect the CU with target markets, as well as the development of effective distribution channels and of product strategy in these markets.

Originality/value

The findings of this study and the implications proposed show the relevance of this topic. The paper focuses on a middle‐income country (Spain) and uses two measurements of firm performance: an accounting rate and a market measure based on the event‐study (excess returns on the stock market generated by the announcement of a foreign expansion).

Details

International Marketing Review, vol. 23 no. 1
Type: Research Article
ISSN: 0265-1335

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Article
Publication date: 21 September 2015

Solomon W. Giorgis Sahile, Daniel Kipkirong Tarus and Thomas Kimeli Cheruiyot

The purpose of this paper is to test market structure-performance hypothesis in banking industry in Kenya. Specifically, the structure-conduct-performance (SCP) and market

Abstract

Purpose

The purpose of this paper is to test market structure-performance hypothesis in banking industry in Kenya. Specifically, the structure-conduct-performance (SCP) and market efficiency hypotheses were examined to determine how market concentration and efficiency affect bank performance in Kenya.

Design/methodology/approach

The study used secondary data of 44 commercial banks operating from 2000 to 2009. Three proxies to measure bank performance were used while market concentration and market share were used as proxies for market structure. Market concentration was measured using two concentration measures; the concentration ratio of the four largest banks (CR4) and Herfindahl-Hirschman Index, while market share was used as a proxy for efficiency. The study made use of generalized least square regression method.

Findings

The empirical results confirm that market efficiency hypothesis is a predictor of firm performance in the banking sector in Kenya and rejects the traditional SCP hypothesis. Thus, the results support the view that efficient banks maximize profitability.

Practical implications

The study provides insights into the role of efficiency in enhancing profitability in commercial banks in Kenya. It has managerial implication that profitable banks ought to be efficient and dispels the notion of collusive behavior as a precursor for profitability.

Originality/value

The paper fills an important gap in the extant literature by proving insights into what determines bank profitability in banking sector in Kenya. Although this area is rich in research, little work has been conducted in the developing economies and in particular no study in the knowledge has addressed this critical issue in Kenya.

Details

International Journal of Emerging Markets, vol. 10 no. 4
Type: Research Article
ISSN: 1746-8809

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Book part
Publication date: 21 May 2021

G. Asllani, S. Grima and Sh. Citaku

Purpose: This chapter addresses the main issues about regulation and protection of competition in Kosovo, with particular attention given to the control of enterprises…

Abstract

Purpose: This chapter addresses the main issues about regulation and protection of competition in Kosovo, with particular attention given to the control of enterprises concentration. The importance of controlling concentrations is based on the fact that enterprise concentration, whether local or international, can produce unequitable market conditions, creating monopolistic positions for some. Therefore, control of access from the Competition Authority is necessary, in order for competition to a level playing field for all.

Design/Methodology/Approach: The authors carried out a desk review of academic literature, the national reports provided by the competition authority and international institutions, competition law and other available important data. This is to determine and highlight the development of economic competition and control of concentrations, for example regulation and supervision in Kosovo and to determine whether this is in line with European Union directives.

Findings: Findings show that competition in Kosovo is still at a phase of development and more is needed to improve and ensure an adequate competition regime in accordance with EU regulations and practices. Significant efforts are necessary to improve legislative alignment and enforcement, specifically on control of mergers and acquisitions.

Practical Implications: The authors herein propose a few measures to be undertaken in order to ensure the effective implementation of the law on the protection of competition and the market economy.

Originality/Value: The authors define the needs for strengthening and the implementation of Competition Law in Kosovo, such as undertaking the proper coordinated steps in order to have adequate competition authority.

Details

New Challenges for Future Sustainability and Wellbeing
Type: Book
ISBN: 978-1-80043-969-6

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Article
Publication date: 19 July 2013

Thao Ngoc Nguyen and Chris Stewart

The purpose of this paper is to examine the degree of concentration and efficiency in the Vietnamese banking system using the structural model.

Abstract

Purpose

The purpose of this paper is to examine the degree of concentration and efficiency in the Vietnamese banking system using the structural model.

Design/methodology/approach

The authors apply the concentration ratio (CR), Herfindahl‐Hirschman Index (HHI) and concentration‐profitability model based upon the Structure‐Conduct‐Performance (SCP) and Efficiency Hypothesis (EH) approaches to examine 48 Vietnamese commercial banks over the period 1999‐2009.

Findings

The authors' empirical results show that the Vietnamese banking industry has become substantially less concentrated; however, large commercial banks still dominate the whole banking system. Further, their results do not support either the traditional Structure‐Conduct‐Performance or the Efficiency Hypothesis.

Practical implications

The State Bank of Vietnam needs to have policies for restructuring the system and promoting competition in the banking sector of Vietnam.

Originality/value

This is the first such study of the Vietnamese banking system.

Details

Journal of Financial Regulation and Compliance, vol. 21 no. 3
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 3 October 2016

In-Mu Haw, Bingbing Hu, Jay Junghun Lee and Woody Wu

The existing literature has established the importance of industry concentration in explaining firm performance and information environments. However, little is known…

Abstract

Purpose

The existing literature has established the importance of industry concentration in explaining firm performance and information environments. However, little is known about whether and how industry concentration affects investors’ ability to anticipate future earnings. This paper aims to investigate this query by identifying and testing two channels, product market power and intra-industry information transfer, through which industry concentration affects the informativeness of stock returns about future earnings.

Design/methodology/approach

The paper measures the informativeness of stock returns about future earnings by the future earnings response coefficient (FERC)). This study estimates the FERC using a firm-level sample from 38 economies.

Findings

The authors find that industry concentration significantly enhances investors’ ability to predict future earnings. Further tests show that both product market power and intra-industry information transfer contribute to explaining the positive association between industry concentration and the FERC, with the former playing a more salient role. Finally, the authors show that a country’s effective competition law attenuates the positive impact of industry concentration on the FERC by weakening the economic impact of the two underlying channels.

Originality/value

This study contributes to the growing literature on the price-leading-earnings relation, industry concentration and international corporate governance.

Details

International Journal of Accounting & Information Management, vol. 24 no. 4
Type: Research Article
ISSN: 1834-7649

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Abstract

Details

Review of Marketing Research
Type: Book
ISBN: 978-0-85724-723-0

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