BANK CONCENTRATION AND COMPETITION; EVIDENCE FROM TÜRKİYE

Abstract

Liberalization of the banking sector has significantly transformed the market structure. The global and Turkish banking markets have become increasingly concentrated due to globalization. Higher concentration may lead to changes in market structure, reducing competition and establishing a situation where a few dominant banks control the market. The issue of competition and concentration should be assessed to create banking rules and reduce the danger of financial crises. It is crucial to properly evaluate, analyze, and comprehend the banking market structure. This research determines the competitive level of the Turkish banking sector from 2010 to 2020 through the Panzar-Rosse model and the concentration level via k-bank concentration ratio and HHI (Herfindahl Hirschman Index). As a result of concentration analyses, it is concluded that the Turkish banking sector is moderately concentrated. Monopolistic competition has been present throughout the 11 years analyzed. Furthermore, the level of competition exhibited minor fluctuations, indicating no significant changes during the analyzed time.

Keywords

• Competition
• Concentration
• Banking

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