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Finance and Credit
 

A methodology to identify banks with some monopolistic (supra-market) capacity

Vol. 21, Iss. 15, APRIL 2015

PDF  Article PDF Version

Available online: 19 April 2015

Subject Heading: Banking

JEL Classification: 

Pages: 2-21

Ezrokh Yu.S. Novosibirsk State University of Economics and Management, Novosibirsk, Russian Federation
ezroh@rambler.ru

Subject The subject of the research is the ability of some domestic credit institutions to do business with the efficiency (by key indicators) that is significantly higher than that of their competitor banks.
     Objectives The objective of the study is to develop a methodology to identify banks with partially monopolistic (supra-market) capacities. The main objectives are to develop a theory explaining the reasons for significant differences in the key performance indicators of some Russian credit organizations, which are caused by the presence of supra-market capacities; to create an algorithm of major methodological approaches to empirical research in this sphere using the theoretical foundation; to develop and test the practical analysis techniques within each approach; to prepare a list of credit institutions having certain supra-market capacities; to establish classification criteria of banks with a monopolistic supra-market capacity; to propose measures for the banking system development in terms of constraining the supra-market capacities of individual banking groups.
     Methods The methodology bases on the definition of key performance indicators of banks. Within the income approach, they include specific income from loan portfolios that include loans to individuals, legal entities and banks, and securities portfolios. Within the cost approach, they include specific cost of fund raising in the form of deposits, balances of on accounts of individuals and legal entities, inter-bank loans, bonds and other securities. Within the margin approach, they include specific net margins in the segment of financing of individuals and legal entities. I used ranking by reduced efficiency, which is characterized by a change in the key indicators. Based on the empirical calculations, I performed the final analysis.
     Results On the basis of the empirical calculations, I justified a list of banks that have supra-market capacities, identified their sources, made proposals on the banking system development in terms of reducing the monopolistic supra-market capacities of individual groups of credit institutions.
     Conclusions and Relevance The developed theory allows developing the existing approaches to the assessment of the competition level; the use of techniques within each approach enables to conduct empirical research; the results and findings contribute to effective development of the domestic banking system.

Keywords: bank, monopolistic, supra-market capacities, exclusive features, competition, macro-competitiveness

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