CONCENTRATION AND COMPETITION OF VIETNAMESE COMMERCIAL BANKS

Abstract

This paper measures the degree of concentration (CR3, CR5, and HI) and competition (statistical value of H) and estimates the relationship between the level of concentration and competition of Vietnamese commercial banks. The results showed that the level of concentration of commercial banks in Vietnam closed to the average level of the region. The statistical values of H in the period 2002-2014 (H = 0.415) indicated that the marker structure of Vietnamese commercial bank system closely followed the monopolistic competition market. The average level of the H-statistical value in three periods 2002-2008, 2009-2011 and 2012-2014 showed an ascending pattern of competitive level of Vietnamese commercial banks although the competition level was slightly lower than the region's average. Particularly, the H-statistical value indicated that the competitive level of the joint-stock commercial bankswas higher than those of the state-owed banks. The result from OLS model confirmed the negative relationship between the level of concentration and competition in Vietnamese banking system. Based on the results, strengthening bank regulations and superivision commercial banks' operations by using economic indicators from the State Bank while reducing direct intervetions from the government helps improve Vietnamese commerical banks' competition.

Keywords: Concentration;Competition;Banking structure; Vietnam.