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(Doc) Competition in the banking industry

   

Added on  2021-01-02

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Accounting research
(Doc) Competition in the banking industry_1
AbstractThe main purpose of study is to identify level of competition in banking sector and whatare the factors that have resulted in it. Also, there are different methods used by researcher toidentify factors due to banking competition is affected. The main objective of study is to identifythe level of efficiency in banking sector of Australia and role of performance variable in it.Moreover, another objective is to identify relationship between competition level and efficiencyof bank. The country selected for research is Australia and sample of 5 banks have been taken.Moreover, data is gathered from year 2005- 2015. The method that is chosen is leaner indexmodel because it uses price elasticity of demand to measure market power. So, with help of thisit has been determined that how rise in demand of financial services changes price.
(Doc) Competition in the banking industry_2
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1LITERATURE REVIEW................................................................................................................1CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8
(Doc) Competition in the banking industry_3
INTRODUCTIONIn present times due to financial crises at global level there has been high rise in bankingcompetition. This has resulted in change in policies and rules related to finance. It is difficult forbanks to compete at global level. Global crises have highly affected the financial stability ofbanks in developing countries. Moreover, government support results in reduction incompetition. It is analysed that instability in financial sector is due to competition among banks.But on other hand competition benefits social welfare. Centralised banking system has increasedmarket power which has allowed bank to charge high interest rate. It is essential to maintainstability in financial sector so that economic growth is preserved. Banks performance isdifferentiated on basis of certain factors that include roles and responsibility assigned bygovernment as well.Moreover, competition in banking highly impacts on growth and development ofcompanies. The overall banking sector is divided into many elements such as liberalization,regulation, financial innovation, merger and acquisition, etc. These all are integrated together inorder to access the competition in banking sector. Government plays a vital role in maintainingstability and competition in banking sector. Their intervention and regulation enables in solvingissues and measuring banks performance. However, reforms and policies formed supports insetting structure of banks. Besides this, it helps in controlling monopoly of banks. Alongside it,higher monopoly banks are having close relationship with companies. They are more flexible inallocating funds. There are various measures available through which banking competition is measured.Here, lerner index approach will be used to measure degree of competition. It determines theratio of difference between price and marginal cost. The lerner index describe relationshipbetween price margin and elasticity of firm. In this index range is 1 to 0. So, having high indexrefers to greater market power. Besides this, if firm lerner index (L) is 0 there is no marketpower. However, marginal cost is 0 , it indicates monopoly power. Besides this, lerner indexanalyses market power separate from loans and deposit markets.LITERATURE REVIEWIn recent times, it is been observed that in banking the competition has increased to greatextent. This is because of many factors which have affected different country banking industry in1
(Doc) Competition in the banking industry_4

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