Competition and efficiency of selected universal banks in the Philippines for the year 2011

College

Ramon V. Del Rosario College of Business

Department/Unit

Financial Management Department

Document Type

Article

Source Title

International Journal of Information Technology and Business Management

Volume

11

Issue

1

First Page

12

Last Page

21

Publication Date

3-29-2013

Abstract

The researcher based his sample on nine universal banks in the Philippines from 2003 to 2011. This research used a correlational analysis to determine the relationship between competition and bank efficiency. The scope of the study is limited to the removal of entry barriers which is one of the six policies of financial liberalization that allowed the entry of the ten foreign banks. To assess the competition among universal banks, Herfindahl index (HI) was used. The study showed that financial liberalization brought greater competition, improved efficiency and less market concentration. It showed that Herfindahl index is negatively related with net interest margin to assets and loan to asset ratio. It also showed that Herfindahl index is positively related with provision for loan losses ratio.

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Disciplines

Finance and Financial Management

Keywords

Universal banks—Philippines; Competition—Philippines

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