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Is too much competition bad for the industry? A Taiwanese banking case

Title
Is too much competition bad for the industry? A Taiwanese banking case
Authors
Choi P.M.S.
Ewha Authors
최문섭
SCOPUS Author ID
최문섭scopus
Issue Date
2016
Journal Title
Investment Management and Financial Innovations
ISSN
1810-4967JCR Link
Citation
vol. 13, no. 2, pp. 128 - 140
Keywords
BankingCompetitionNet interest marginTaiwanese banking industry
Publisher
LLC CPC Business Perspectives
Indexed
SCOPUS scopus
Abstract
The authors examine the relationship between net interest margin, a measure of banks' pricing power, and lending market shares in the environment of regulation changes in Taiwan from 1991 to 2009. Specifically, the effect on net interest margins from mandatory industry consolidation is studied in depth. The authors find that firm market shares in the first period have positive and highly significant impacts on the bank profitability, but for the second period, the authors find increased non-performing loans. During the second period, the credit lending market share became a main profit component but with a negative impact on profitability. Additionally, the focus of lending type shifted from collateralized to credit lending, a type of lending that has much higher profitability, but such lending has negative and significant effects on banks' profitability. The results suggest a mandatory industry-wide consolidation affected the bank lending types, with banks focusing more on increasing short-term market share through credit lending than on profitability. © Paul M.S. Choi, Seth H. Huang, 2016.
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경영대학 > 경영학전공 > Journal papers
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