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

Tri Mulyaningsih, Anne Daly, Riyana Miranti


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.


market structure, endogeneity, banking, industry, VECM

Full Text:


Economic Journal of Emerging Markets (EJEM) is accredited by the Ministry of Research, Technology and Higher Education of the Republic of Indonesia (RISTEKDIKTI), No. 30/E/KPT/2018. It is currently indexed in:

Emerging Source Citation Index Clarivate AnalyticsREPEC (Econpapers)EBSCO, ProQuestDirectory of Open Access Journals (DOAJ)Cite FactorSinta (Science and Technology Index)IPI (Indonesian Publication Index)OCEC WorldCatHarvard LibraryThe Univesity of ManchesterUniversity of OxfordGoogle ScholarAsean Citation IndexDimensions - Digital Science

  Harvard Library   Google Scholar     Indonesian Publication Index (IPI)   WorldCat  Harvard Library  University of Oxford    

 Creative Commons License
Economic Journal of Emerging Markets by is licensed under a Creative Commons Attribution 4.0 International License.