Concentration Level in the Banking Industry: Serbia, Croatia and Montenegro (original) (raw)
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The European Journal of Applied Economics
In the last few years there were significant changes in the financial sector on the global level. The aim of this paper is to analyze banking sectors among Serbia, Montenegro and Croatia and make comparative analysis. In these countries the biggest part of financial sector is the banking sector. The covered period of the analysis is 2017-2021 and selected ratios of concentration were calculated to define market structures in these countries. Due to mergers and acquisitions in the last few years the number of the banks decreased significantly. The presented results regarding static and dynamic analysis of concentration indicate that Croatia and Montenegro banking sectors are more concentrated than Serbia banking sector. The significant impact on market structure is the decreasing number of the banks. This is an interesting finding which should be further researched.
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The aim of this paper is to research the level and development of market concentration in the banking sector in Serbia. In the first chapter, the authors presented different concentration theories from economic literature and explained the possible impact of high concentration on various economic parameters. The second chapter provides information on methodology and different indicators used in order to measure the level of market concentration in the banking sector in Serbia. Empirical results of the analysis are presented in the third chapter of the paper and they include concentration of assets, capital, loans, deposits, interest income and net profit (loss) before tax, as well as comparative analysis with Central, Eastern and South European countries. Finally, the last chapter summarizes key messages of the paper.
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This paper aims to approach concentration in the banking industry from two perspectives. Broader analysis shows that capital markets are underdeveloped and that Serbian financial system is bank based. Analysing the concentration from a more narrow perspective, authors concluded that the banking sector in Serbia is characterized as a highly fragmented one, but the reduction in number of banks did not lead to an increase in the concentration of any of the analysed parameters, thus the level of concentration is moderately low. Detail analysis of selected countries was performed as comparative analysis. Unfortunately, it was impossible to make a universal conclusion about whether reducing the number of banks affects positively or negatively the level of concentration.
An Analysis of Concentration and Competition in the Banking Sector of the Republic of Serbia
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The concentration level is proof of development and tendencies on the observed market. It determines the existence of competition and fair play among competitors and participants. This paper aims to analyse and measure the concentration level within the banking sector in the Republic of Serbia. The concentration level is measured applying the concentration ratio for four and five biggest banks (Cr4 and Cr5) and Herfindal-Hirschman index (HH index) in the period from 2018 to the third quarter of 2020 for the following banks' balance sheet positions: assets, approved loans, and collected deposits. The banking market is reported to be medium concentrated according to CR5 and low concentrated according to Cr4 and HHI in all observed categories. The empirical research shows that there is competition among banks in Serbia (loose oligopoly), which depends on the concentration level. Furthermore, the acquired results contribute in the comprehension and perception of the direction in whi...
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The author in this paper considers the question of the use of indices of concentration and competition in the banking market. As example he chose the Serbian banking sector during the second half of the 2010s. The analyses are based on the data of bank financial statements for relevant years, as well as the results of other researchers. Тhe traditional concentration indicators (CRn and HH indices) are used, as well as the Gini coefficients and Rosenbluth and Tideman-Hall index and coefficient of entropy. At the end author calculated Linda Indices, the rarely used indicators not only in Serbia, and new Svetunkov's approach and coefficients of the model based on Gauss exponential curve. The concentration degree in all cases is calculated based on five variables: total assets, deposits, capital, bank operating income and loans. Although these variables are highly correlated, the results show relatively important differences of its use. In the case of such variable as capital, the Linda indices suggested the existence of an oligopoly structure. In conclusion, it was demonstrated that in the case of the relatively large number of banks in Serbia, the existing concentration degree is generally moderately low, which provides suitable conditions for the development of healthy competition among them. At the end, there is necessary to emphasize different capability of information respective indicators and its different discriminative power. In future research this is fact that is it undoubtedly necessary particularly not to ignore.
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U radu je testirano osnovno stanovište SCP paradigme-da li između varijacije stepena koncentracije i stepena konkurencije u okviru bankarskih tržišta Srbije, Hrvatske, Rumunije i Češke postoji linearna veza, kao i koji je smer i intenzitet ove veze ukoliko ona postoji. U analizi su korišćeni panel podaci za odabrane pokazatelje koncentracije (Herfindal-Hiršmanov indeks i racio koncentracije pet najvećih preduzeća) i pokazatelji konkurencije (kamatni spred, ROA, ROE) za period 2009-2014. godine. Izolovana analiza pokazatelja stepena koncentracije odabranih bankarskih tržišta ukazuje da je stepen koncentracije najniži u Srbiji, a najviši u Hrvatskoj. Rezultati ispitivanja stepena i smera kvantitativnog slaganja između analiziranih pokazatelja koncentracije i profitabilnosti ukazuju da je SCP paradigma uspešno dokazana u slučajevima u kojima to nije bilo očekivano, uzimajući u obzir vrednosti pokazatelja koncentracije i profitabilnosti. Navedeno se, pre svega, objašnjava specifičnostima bankarskih tržišta analiziranih evropskih zemalja.
Comparative Analysis of the Banking Sector Competitiveness in Serbia and Montenegro
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Central banks often use certain concentration indices in their official reports to determine the degree of intensity of competition, of which the most common are the concentration ratio and the Herfindahl-Hirschman index. It is important to emphasize that when calculating the value of these indices, the National Bank of Serbia most often uses the absolute value of assets. In addition to the mentioned indices, the values of the Gini coefficient, Entropy coefficient, Rosenblatt index and graphical representation of the Lorenz curve in the period 2015–2019 are presented in this paper, using the balance sheet position loans and receivables from customers, but not including loans and receivables from banks and other financial organizations. The results of the static and dynamic analysis of concentration indicate that, compared to Montenegro, the banking sector of Serbia is characterized by a larger number of banks, less concentration on the market, and stronger intensity of competition. ...
Banking Concentration Impact on Market Structure of Post-Soviet and Eu Member Country – Estonia
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The new wave of mergers and acquisitions after the global financial crisis intensified the interest of policy makers and academics in bank concentration and competition and the role of the state in competition policies and regulations (policies and laws that affect the market structure and degree of competition). It is important to not only make sure that banking sector is competitive, transparent and efficient, but also stable. The purpose of the study was to investigate and analyze the degree of concentration in Estonian banking market and its impact on competition and market structure of financial markets over the period of 2013-2017. Both the structural and the non-structural measurement approaches of concentration and competition, along with the desk research, a case study and interviews with the financial sector professionals and an independent expert was employed to address research purpose. The findings of the study indicate that, in the Post-Soviet and nowadays EU member co...