Non-structural approach to banking competition

Kussikbayeva Laura Zakarievna

The important role of banking in the economy makes competition between banks an important and timely issue in many studies that attempt to study the determinants and consequences of competition in banking. The literature on the definition of competition in banking can be divided into structural and non-structural approaches. The structural approach derives the degree of competition from the structure of the market. The non-structural approach, based on the New Empirical Industrial Organization, assesses the degree of competition directly by observing the behavior of firms in the market. Non-structural measures of competition include: the Lerner index, the hypothetical variational model, the Panzar-Rosse model, the Boone indicator. This article discusses non-structural methods for determining the degree of competition, widely used in banking practice.

Keywords:banking, competition, non-structural approach to banking competition, Lerner index, hypothetical variational model, Panzar-Rosse model, Boone indicator.