A study on the relationship of deregulation of bank entry and branching on the efficiency and competition of Philippine private domestic commercial banks for the period 1995-2004
Date of Publication
2006
Document Type
Bachelor's Thesis
Degree Name
Bachelor of Science in Management of Financial Institutions
Subject Categories
Finance and Financial Management
College
Ramon V. Del Rosario College of Business
Department/Unit
Financial Management
Thesis Adviser
Neriza M. Delfino
Defense Panel Member
Abener M. Balatbat
Rachel C. Reyes
Abstract/Summary
The banking system serves as a vital part of the economy. Banks serve as intermediaries that become a major source of growth in the industry. With this, the regulation of the banking industry is a critical responsibility of the government, specifically the Bangko Sentral ng Pilipinas (BSP). Regulations will surely affect the banking industry either positively or negatively so the BSP must be very cautious on the regulations to be implemented.
The purpose of this study is to analyze the effect of deregulation of the other banking sectors and a regulation imposed by the BSP in 1999- a moratorium on the establishment of new banks and branch expansion of existing banks. Republic Act no. 8791, or the new General Banking Law of 2000, formalized the moratorium on new bank entry by stipulating that, under Sec. 8.3, no new commercial bank shall be established within three years from the efficiency of this Act (www.bsp.gov.ph). As a part of the objectives of the study, the proponents analyzed and identified the importance of deregulation on bank entry and branching, determined the impact of deregulation on competition and efficiency, and made a comparison of the competitive behavior and efficiency of the Philippine Commercial Banking sectore before and after the 1999 moratorium.
The group chose eight banks to be included in the study. The study only focused on non-expanded domestic private commercial banks for the reason that it was stated in the new General Banking Law of 2000 that no new commercial bank shall be established within three years from the efficiency of the Act. To be able to analyze data gathered from different sources, the group used several statistical tools. Graphs and a table were presented to help in a more effective and easier understanding of the results of the study.
Based on the results, the group was able to conclude that deregulation on other banking sectors and moratorium on the commercial banking sector have indeed affected competition and efficiency of the Philippine commercial banking industry. Deregulation has indeed achieved its purpose and successfully promoted competition among the different banking sectors. However, effects of increased competition affected the commercial banking system positively and negatively. The banks became more competitive, but the consequence was a decline in its returns because of being less efficient. Therefore, the consequence of the deregulation and moratorium imposed by the BSP is not entirely conclusive as beneficial to the commercial banking industry.
Abstract Format
html
Language
English
Format
Accession Number
TU13567
Shelf Location
Archives, The Learning Commons, 12F, Henry Sy Sr. Hall
Physical Description
108 leaves : ill. (some col.) ; 28 cm.
Keywords
Banks and banking--Philippines; Philippines-- Economic conditions--20th century
Recommended Citation
Capistrano, C. K., Cotio, J. S., Quiat, M. P., & Yee, E. M. (2006). A study on the relationship of deregulation of bank entry and branching on the efficiency and competition of Philippine private domestic commercial banks for the period 1995-2004. Retrieved from https://animorepository.dlsu.edu.ph/etd_bachelors/14189
