Concentration, efficiency, and performance in the Philippine commercial banking industry: An empirical analysis using stochastic frontier approach

• Main Authors: Gloriani, Mark Gregore G., Ogali, Aigina Krystel V., Parallon, Jessa B., Te, John Philip P.
• Format: text
• Language: English
• Published: Animo Repository 2005
• Subjects: Banks and banking > Philippines; Economics
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/14350
• Institution: De La Salle University

BSP Circular 237 encourages mergers and consolidations among banks to improve efficiency and profitability. This paper investigates whether there really is a positive relationship between the bank's structure and its profitability. After establishing the existence of such relationship, this paper seeks to explain what explain the positive relationship between structure and profitability in the Philippine Commercial Banking industry. There are two competing theories with different policy implications which explain profitability: the market power theories and the efficiency theories. After finding the explanation, this paper attempts to see whether more concentrated Philippine Commercial Banks engage in anti-consumer practices by using their market power against depositors and borrowers.