Deregulation, competition and consumer welfare in a banking market: evidence from Hong Kong |
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Authors: | Chun-Yu Ho |
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Institution: | (1) Riyadh Community College, King Saud University, Kingdom of Saudi Arabia, P.O. Box 28095, Riyadh, 11437, Kingdom of Saudi Arabia |
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Abstract: | This paper examines competition among commercial banks following deregulation in a small open economy. I jointly estimate
a system of differentiated product demand and pricing equations, and use conduct parameters to identify market structure.
Overall, I find positive outcomes for the banking deregulation, which suggest that the benefits of deregulation understood
in large industrialized economies indeed apply to a small open economy. Encouragingly, the industry becomes more competitive
and the consumers are better-off after the deregulation. Empirical results also indicate that the banking sector is characterized
by non-cooperative competitive behavior. Bank size is an important determinant of consumer’s bank choice. |
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Keywords: | |
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