THE IMPACT OF THE COVID-19 CRISIS ON BANKING MARKET CONCENTRATION AND COMPETITION IN THE WESTERN BALKANS

Eighth International Scientific Conference Contemporary Issues in Economics, Business and Management [EBM 2024], [pp. 255-265]

AUTHOR(S) / AUTOR(I): Nađa Đurić , Andrijana Đurđević , Zlata Đurić 

Download Full Pdf   

DOI: 10.46793/EBM24.255DJ

ABSTRACT / SAŽETAK:

This paper analyzes the impact of the COVID-19 pandemic crisis on the structure of the banking market, with a specific focus on concentration levels and competition intensity within the banking sector of Western Balkan countries. Both competition and concentration are critical factors that significantly affect not only the profitability and operational efficiency of banks but also have extensive implications for macroeconomic trends and the overall stability of the financial system. The primary objective of this research is to identify key trends and structural changes in the market due to the COVID-19 crisis, using three relevant indicators: The Concentration Ratio (CR), the Entropy Index, and the Herfindahl-Hirschman Index (HHI). The findings will provide significant information for bank management, aiding in timely decision-making and strategic adjustments in response to future crises, thereby enabling more effective risk management and preservation of competitive market positions. This study is based on an empirical analysis of balance sheet data from all commercial banks in the region, covering the period from 2019 to 2022, which includes pre-crisis, crisis, and post- crisis phases. The results aim to contribute to the broader understanding of how systemic shocks like pandemics reshape banking structure dynamics and inform policymakers in designing measures to enhance financial sector resilience.

KEYWORDS / KLJUČNE REČI:

COVID-19 crisis, banking market structure, market concentration, banking competition, Western Balkans countries

REFERENCES / LITERATURA:

  • Alihodžić, A. (2019). Tržišna koncentracija banaka i nezaposlenost: Evidencija na tržištu banaka Bosne i Hercegovine i Srbije. Bankarstvo, 48(2), 32–59. https://doi.org/10.5937/bankarstvo1902032A
  • Bain, J. S. (1951). Relation of profit rate to industry concentration: American manufacturing, 1933–1940. The Quarterly Journal of Economics, 65(3), 293–324. https://doi.org/10.2307/1882217
  • Bajo-Rubio, O., & Salas, R. (2004). Decomposing change in industry concentration. The Empirical Economics Letters, 3(6), 311–319.
  • Bhattacharya, K., & Das, A. (2003). Dynamics of market structure and competitiveness of the banking sector in India and its impact on output and prices of banking services. Reserve Bank of India Occasional Papers, 24(3), 123-159.
  • Barjaktarović, L., Filipović, S., & Dimić, M. (2013). Concentration level of the banking industry in CEE countries. Industrija, 41(3), 36–54. https://doi.org/10.5937/industrija41-4712
  • Berger, A. N., & Hannan, T. H. (1989). The price-concentration relationship in banking. Review of Economics and Statistics, 71(2), 291–299. https://doi.org/10.2307/1926975
  • Begović, B., Bukvić, R., Mijatović, B., Parivodić, M., Pavić, V., Sepi, R., Stojanović, B., Hiber, D. (2002) Antimonopolska politika u SR Jugoslaviji – analiza postojećih tržišnih struktura i antimonopolskih institucija. Beograd: Centar za liberalno- demokratske studije
  • Claessens, S., & Laeven, L. (2003). What drives bank competition? Some international evidence. World Bank Policy Research Working Paper, 3113. Retrieved January 5, 2021, from https://openknowledge.worldbank.org/bitstream/handle/10986/18121/multi0page.pdf?sequence=1&isAllowed=y
  • Demirguc-Kunt, A., Laeven, L., & Levine, R. (2003). Regulations, market structure, institutions, and the cost of financial intermediation.
  • Dimić, M. (2015). Analiza Nivoa Koncentracije u Bankarskom Sektoru iu Sektoru Osiguranja u Zemljama Centralne i Istoĉne Evrope (Doctoral dissertation, Singidunum University (Serbia)).
  • Dumičić, K., Pavković, A., & Akalović Antić, J. (2012). Mjerenje koncentracije u bankarstvu u Republici Hrvatskoj. Zbornik Ekonomskog fakulteta u Zagrebu, 10(2), 117-136.
  • Filipović, M., Avramović, V., & Račić, Ž. (2016). The analysis of concentration in the banking sector of Serbia in the post-crisis period. Škola biznisa 2/2016, 111-119. DOI 10.5937/skolbiz2-11822
  • Galetić, F., & Obradović, T. (2018). Measuring concentration of the banking market of the Republic of Croatia. In 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disruptive Change. April 13th-14th, 2018, Dubrovnik, Croatia (pp. 598-625). Zagreb: Governance Research and Development Centre (CIRU).
  • Gelos, R. G., & Roldós, J. (2004). Consolidation and market structure in emerging market banking systems. Emerging Markets Review, 5(1), 39–59. https://doi.org/10.1016/j.ememar.2003.12.002
  • Gelos, R. G., & Roldos, J. (2004). Consolidation and market structure in emerging market banking systems. Emerging Markets Review, 5(1), 39–59. https://doi.org/10.1016/j.ememar.2003.12.002
  • Kostić, M. (2008). Merenje koncentracije ponude grane. Ekonomski horizonti, 10(1), 89–108.
  • Levy, Y., & Micco, A. (2007). Concentration and foreign penetration in Latin American banking sectors: Impact on competition and risk. Journal of Banking & Finance, 31(6), 1633–1647. https://doi.org/10.1016/j.jbankfin.2006.11.003
  • Lončar, D., & Rajić, V. (2012). Koncentracija i konkurentnost bankarskog tržišta Srbije – Postojeće stanje i moguće promene pod uticajem buduće tržišne konsolidacije. Ekonomika preduzeća, 60(7-8), 372–385. https://doi.org/10.5937/ekopre1208372L
  • Marinković, S. (2006). Stepen konkurencije u bankarskom sektoru Srbije kao faktor konkurentnosti nacionalne ekonomije. Ekonomske teme, 44(4-5), 71–84.
  • Miljković, M., Filipović, S., & Tanasković, S. (2013). Tržišna koncentracija u bankarskom sektoru– Primer Srbije. Industrija, 41(2), 7–25. https://doi.org/10.5937/industrija41-4064
  • Mirković, V. (2016). The Analysis of Concentration Trend in Serbian Banking Industry. In Book of Proceedings (pp. 175-184).
  • Narodna banka Srbije. (2020). Bankarski sektor u Srbiji – Kvartalni izveštaj za period od 2009. godine do 2019. godine (Arhiva). Retrieved from https://nbs.rs/sr_RS/finansijske-institucije/banke/izvestaji-i-analize/
  • Narodna banka Srbije. (2020). Prikaz vesti. Retrieved from https://www.nbs.rs/sr_RS/scripts/showcontent/index.html?id=15274&konverzija=no
  • Radivojević, V. (2013). Merenje koncentracije i tržišne moći privrednih subjekata u funkciji unapređenja politike zaštite konkurencije [Doctoral dissertation, Univerzitet u Nišu – Ekonomski fakultet].
  • Stojmenović, M. (2021). Analysis of market concentration in the banking sector of the Republic of Serbia. Bankarstvo, 50(1), 134-153.
  • Šaj, O. (2005). Industrijska organizacija – Teorija i primena. Beograd: Ekonomski fakultet. Savić, Lj. (2000). Tržišne strukture u Jugoslovenskoj industriji. Industrija, 26(1-4), 1–19.