Concentration and Competition in the Turkish Banking Sector: 1995-2005

Abstract

Due to the complex and close interaction of banks with other economic units, any trouble in banking sector might have repercussion on the whole economy which makes the market structure and competition in banking sector as a cynosure. In fact, in order to understand the market structure, concentration measures (Herfindahl) have been incorporated in the relevant regulations of United States of America and European Union. In this research, apart from the traditional approaches, concentration in the Turkish banking sector has been considered simultaneously in terms of assets, loans, deposit and turnover. In order to analyze market structure more comprehensively; dominance, disparity and dynamic indexes have been used in addition to static measures. According to the findings of this study, concentration in the relevant markets shows decreasing trend in the period of 1995-1999 and increasing tendency in 2000-2005. However, net interest margins which can be seen as the relevant prices in the sector have declined in both periods.Banking, Concentration, Competition