Exploring competitiveness in banking sector of a small island economy: a study of Fiji |
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Authors: | Ronald R Kumar Arvind Patel |
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Institution: | 1. School of Accounting and Finance, University of the South Pacific, Suva, Fiji
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Abstract: | The paper explores the competitiveness in the banking sector in Fiji using the Panzar and Rosse (J Ind Econ 35:443–456, 1987) method. We compute the concentration ratios and Herfindahl–Hirschman index based on total assets, loans, and deposits to examine the concentration level. To compute the Panzar-Rosse H-statistics, we use fixed effect regression method duly controlling for heterogeneity. The results show banks in Fiji exhibit monopolistic behavior and are biased towards monopoly/conjectural variation short-run oligopoly upon examining the significance level of the upper and lower bounds of the computed H-statistics. Moreover, the results also show that banks revenue are influenced positively by interest expenses, capital adequacy ratio, and the number of branches; and negatively by personnel expenses, other operating expenses, and firm size measured by total assets. |
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