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Industrija
2015, vol. 43, iss. 3, pp. 7-26
article language: English
document type: Original Scientific Paper
published on: 14/12/2015
doi: 10.5937/industrija43-7648
Testing for competition in Serbian banking industry: The Panzar-Rosse approach
aSerbian Academy of Sciences and Arts - SASA, Belgrade
bNational Bank of Serbia, Belgrade
cUniversity of Belgrade, Faculty of Economy

e-mail: aljosa.babic@sas.com

Abstract

The level of competitiveness in Serbian banking industry is tested using the Panzar-Rosse model on bank level data in period from 2004 to 2012. The panel estimation results imply monopolistic competition in the entire banking sector. However when the methodology is applied to the subset of the large banks, which comprise more than 65% of total banking sector assets, we find that they exhibit monopoly or strong oligopoly behaviour with perfect collusion. This implies that the prices of the banking products are suboptimal in terms of general welfare.

Keywords

Panzar-Rosse test; competition; banking industry

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