I am working on a research project, namely the impact of bank competition on borrowers.
I am trying to make a conceptual framework and in this framework, my independent variable is bank competition and the dependent variable is bank borrowers. However, I do not know what indicators to use to measure the independent variable-bank competition. Any advice will be greatly appreciated.
Dear Rasel
You may want to take a look at
https://www.aeaweb.org/aea/2011conference/program/retrieve.php?pdfid=222
https://en.wikipedia.org/wiki/Lerner_index
Best
Phuc Canh
Can you explain a bit more what you mean by industry? Do you mean the competetiveness of the bank industry in a country? If so, some variant of the Herfindahl index would work. See Bikker and Haaf (2002) for a useful list of possible measures.
Dear Susnjara,
Yes, I mean the competition among banks. However, I am looking for some factors that I can use to define 'competition' in my conceptual framework. Hope it is clear now.
Dear Rasel,
To assess the impact of competition on the borrowers is advisable to use two indicators: the intensity of competition in the banking segment of the market and the competitiveness of the bank.
One of the known measures of bank competition is the H_statistic developed by Panzar and Rosee. This measure for banking industries for a large number of countries is measured and published by the World Bank. However, if you use data for just one sector, you have to measure it on a roll-over basis. Just type "bank competition and panzar rosee" on the google and you will find many papers that use the methodology.
Good Luck
In adddition to what was mentioned, you can also use Lerner index and Boone indicator.
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