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Open AccessArticle

Empirical Measurement of Competition in the Thai Banking Industry

Department of Economics, Kasetsart University, 50 Phahonyothin Rd, Chatuchak, Bangkok 10900, Thailand
Author to whom correspondence should be addressed.
Economies 2020, 8(2), 44;
Received: 22 February 2020 / Revised: 21 May 2020 / Accepted: 25 May 2020 / Published: 2 June 2020
(This article belongs to the Special Issue The Theory Applications of Finance and Macroeconomics)
The degree of competition in the banking industry can be observed and measured by two approaches, structural and nonstructural. Based on these two approaches, there are various indicators, which are different factors and methods. This paper aims to provide calculations, determine a good indicator, and assess the competitive environment of the Thai banking industry. Specifically, there are four indicators—concentration ratio, Herfindahl–Hirschman Index, Lerner Index, and Panzar–Rosse H statistic—which are widely used to examine the efficiency and effectiveness of policies in the banking industry. The findings indicate that the Lerner Index, calculated by stochastic frontier analysis, is the most reliable indicator of the banking competition environment in Thailand. It has a range of 0.36 to 0.60 and an average value of 0.40. Furthermore, during the period of study, the degree of Thai banking competition had a tendency to increase over time, which reflects an increase in allocative efficiency of resources in the banking industry. This is in accordance with the Financial Sector Master Plan of the country. However, this result probably leads to instability of the financial system. Therefore, policy-makers should carefully regulate competition policy by considering the systematic risk of the banking system at the same time. View Full-Text
Keywords: banking; competition; Lerner Index banking; competition; Lerner Index
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MDPI and ACS Style

Prayoonrattana, J.; Laosuthi, T.; Chaivichayachat, B. Empirical Measurement of Competition in the Thai Banking Industry. Economies 2020, 8, 44.

AMA Style

Prayoonrattana J, Laosuthi T, Chaivichayachat B. Empirical Measurement of Competition in the Thai Banking Industry. Economies. 2020; 8(2):44.

Chicago/Turabian Style

Prayoonrattana, Jirawan; Laosuthi, Thanarak; Chaivichayachat, Bundit. 2020. "Empirical Measurement of Competition in the Thai Banking Industry" Economies 8, no. 2: 44.

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