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Quality & Quantity

, Volume 48, Issue 6, pp 3169–3183 | Cite as

Exploring competitiveness in banking sector of a small island economy: a study of Fiji

  • Ronald R. Kumar
  • Arvind Patel
Article

Abstract

The paper explores the competitiveness in the banking sector in Fiji using the Panzar and Rosse (J Ind Econ 35:443–456, 1987) method. We compute the concentration ratios and Herfindahl–Hirschman index based on total assets, loans, and deposits to examine the concentration level. To compute the Panzar-Rosse H-statistics, we use fixed effect regression method duly controlling for heterogeneity. The results show banks in Fiji exhibit monopolistic behavior and are biased towards monopoly/conjectural variation short-run oligopoly upon examining the significance level of the upper and lower bounds of the computed H-statistics. Moreover, the results also show that banks revenue are influenced positively by interest expenses, capital adequacy ratio, and the number of branches; and negatively by personnel expenses, other operating expenses, and firm size measured by total assets.

Keywords

Competition Banking Developing countries Empirical study Fiji 

Notes

Acknowledgments

We would like to sincerely thank the editor in chief, Professor V. Capecchi and the reviewers for their comments and advice, and the Springer Correction Team. We would also like to thank Professor Peter Stauvermann of Changwon National University, Ms. Ashleen Prasad (former teaching assistant in the School of Accounting & Finance) and Radika Kumar (PhD candidate at the School of Economics) for the discussions during the initial phase of the paper.

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Copyright information

© Springer Science+Business Media Dordrecht 2013

Authors and Affiliations

  1. 1.School of Accounting and FinanceUniversity of the South PacificSuvaFiji

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