A new measure of competition in Indian loan markets
Open Access
- 21 October 2013
- journal article
- Published by Center for Strategic Studies in Business and Finance SSBFNET in International Journal of Finance & Banking Studies (2147-4486)
- Vol. 2 (4), 60-77
- https://doi.org/10.20525/ijfbs.v2i4.163
Abstract
This study examines bank competition in the loan markets in India using a new competitiveness index, the Augmented Relative Profit Difference (ARPD). The ARPD quantifies the impact of marginal costs on performance, measured in terms of market shares. The theoretical foundation of the ARPD is robust when compared to other conventional measures. Applying this unbiased competition indicator to loan markets shows that financial reform has contributed to significant improvements in competition. Public sector banks and private sector banks are more competitive than foreign banks too. In addition, we find that the Indian loanmarkets are monopolistic in nature.Keywords
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