Market Power of State Commercial Banks in China
This paper provides a framework to assess the competitive conduct of state commercial banks in China and its response to banking reform. I propose an oligopolistic framework in which banks are differentiated in their products and costs to maximize pro.t by setting prices. I employ the differentiated product approach proposed by Berry (1994) and applied to the banking research by Dick (2002) for US and Nankane et al (2006) for Brazil to investigate the market structure. Since China is a bank-based .nancial system,banks are the main source of funding which increases the bargaining power of banks. On the other hand,banks are responsible for policy lending which reduces the incentive of pro.t maximization to provide cheap credit. These two motives complicate the analysis of market structure. I estimate a structural model of demand for deposit to recover the demand elasticity and price-cost margin. The results show that consumers have preference on availability of employees and national branch network. Eliminating branches and lying off workers impose welfare cost on consumers. Moreover,state commercial banks do not operate e￠ ciently during the sample period from 1994 to 2000 and the reforms have a limited success in improving the incentive for profit.
China Banks Competition Demand Estimation Market Structure.
Chun-Yu Ho
Department of Economics,Boston University.
国际会议
成都
英文
2007-07-09（万方平台首次上网日期，不代表论文的发表时间）