Competition in Hong Kong’s Banking Sector: A Panzar–Rosse Assessment
The operating environment of the banking sector in Hong Kong has undergone major changes in recent years, including regulatory liberalization, technological progress and industry consolidation.1 These structural developments could have implications for competitive conditions in the sector. Competition could lower financial intermediation costs and contribute to improvements in economic efficiency. However, since it may also reduce the market power and profitability of banks, it could weaken their ability to withstand adverse developments. It is important for policy makers to know the extent of competition in the sector and how it has evolved over time.
KeywordsBanking Sector Input Price Large Bank Small Bank Competitive Condition
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