Template-Type: ReDIF-Paper 1.0
Author-Name: Csaba Móré
Author-X-Name-First: Csaba
Author-X-Name-Last: Móré
Author-Email: morecs@mnb.hu
Author-Workplace-Name: Magyar Nemzeti Bank
Author-Name: Márton Nagy
Author-X-Name-First: Márton
Author-X-Name-Last: Nagy
Author-Email: nagymar@mnb.hu
Author-Workplace-Name: Magyar Nemzeti Bank

Title: Relationship between Market Structure and Bank Performance: Empirical Evidence for Central and Eastern Europe

Abstract: This study aims to assess the role of market structure in the pricing behaviour and profitability of Central and Eastern European banks. In order to determine the most important variables related to the banks' pricing behaviour and profitability, we create a simple Cournot model. Then using these exogenous variables we build non-formal equations for testing the SCP (structure-conduct-performance) and the RMP (relative market power) hypotheses. Using the data of individual banks of eight Central and Eastern European countries in the period of 1998-2001 the tests reject the SCP hypothesis, but confirm the RMP hypothesis. In addition, we show that other factors, such as costs, risks, reserve ratio as well as the depth of bank intermediation also play an important role in banks' performance.

Length: 49 pages
Creation-Date: 2003
File-URL: http://www.mnb.hu/letoltes/wp2003-12.pdf
File-Format: Application/pdf

Number: 2003/12
Classification-JEL: D43, G21, L13.
Keywords: bank performance, market structure, market power.
Handle: RePEc:mnb:wpaper:2003/12