China’s Banking System, Market Structure, and Competitive Conditions
China’s Banking System, Market Structure, and Competitive Conditions
Omar Masood1(), Bruno S. Sergi2()
1. Business School, University of East London, Docklands Campus, University Way, London E16 2RD, UK; 2. Business School, University of Messina, Messina 98122, Italy
This paper presents an empirical assessment of the market structure and the competitive conditions of the Chinese banking sector. We applied the Panzar-Rosse H-statistic on the data collected from a panel including 16 most significant Chinese banks for the period 2004–2007. Equilibrium tests and the competitive conditions tests were applied on the data. From the pooled regression in the whole period, we found that the banking sector in China for 2004–2007 was monopolistically competitive. We also show that the Chinese banks were not able to achieve high records of profitability in monopolistically competitive markets.
