Analysis of the competition of the Nicaraguan Banking System
Abstract
This document investigates which market structure is consistent with the behavior of commercial banks during the 2008-2018 period. The exercise is based on the calculation of the H statistic using the panel data technique. The results indicate an H statistically different from zero and one, suggesting that the banking industry shows an anticompetitive behavior characteristic of oligopolies. The qualitative analysis of the determinants of competition shows that the Nicaraguan Banking System is moderately concentrated in the fund raising and placement markets, with little banking density compared to the CARD region. However, in
terms of contestability, Nicaragua has few entry and activity restrictions, which favors the development of the competitive environment despite its moderate concentration. Likewise, the development of the stock market and macroeconomic stability are factors that affect the degree
of competition.
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Copyright (c) 2023 Adolfo Rocha Santana
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