An Empirical Test of the Structure, Conduct-Performance Paradigm in the Asian and Pacific Basin Countries

Document Type

Article

Language

eng

Format of Original

19 p.

Publication Date

1996

Publisher

Taylor & Francis (Routledge)

Source Publication

Journal of the Asia Pacific Economy

Source ISSN

1354-7860

Abstract

This paper tests the structure‐conduct‐performance paradigm in eighteen Asian and Pacific Basin countries. The results suggest that concentration in the banking markets in these countries lead to monopoly profits being earned and is a signal of collusive behaviour among the leading banks. Competitive imperfections allow banks to set prices that are less favourable to consumers thereby decreasing total consumer and producer surplus. This has important policy implications for merger activity. A further increase in concentration in the banking market in these countries will decrease the level of competition in the market. Regulatory actions, such as anti‐trust laws, are justified on efficiency grounds as well as for raising economic welfare.

Comments

Journal of the Asia Pacific Economy, Vol. 1, No. 2 (1996): 203-221. DOI.

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