"http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> Managing the endogeneity problem of the market structure: a study on banking competition | Mulyaningsih | Economic Journal of Emerging Markets

Managing the endogeneity problem of the market structure: a study on banking competition

Tri Mulyaningsih, Anne Daly, Riyana Miranti

Abstract


Recent literature suggests that the market structure is an endogenous variable that is determined by a firm’s behaviour and the competitive environment of the industry. This study examines the relation between the market structure and the banks’ behaviour in Indonesian banking by considering the endogeneity problem of them as variables. The estimations using the Vector-Error-Correction approach suggest that the structural approach provides a valid prediction of the relationship between market structure and bank behaviour by recognizing the endogeneity issue between those two variables. The banking industry would be more competitive if the market was less concentrated.


Keywords


market structure, endogeneity, banking, industry, VECM

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DOI: http://dx.doi.org/10.20885/ejem.vol7.iss2.art6

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Economic Journal of Emerging Markets (EJEM)
ISSN 2086-3128 (print), ISSN 2502-180X (online)
Published by:
Center for Economic Studies, Department of Economics,
Universitas Islam Indonesia, Indonesia.

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EJEM by http://journal.uii.ac.id/index.php/JEP/ is licensed under a Creative Commons Attribution 4.0 International License.