Competition and competitiveness-drivers for economic growth and better performance of the financial sector
Keywords:
competition, growth, performance
Abstract
Competition is important for proper functioning of all economic sectors, because it pressures the companies to be more innovative, efficient and effective. With the proper competition, the results show better performance and achievement of the desired outcome. Consequently, well-functioning companies are drivers for economic growth. However, competition in the financial sector is not as easy applicable as in the other economic sectors. High regulations can affect the flexibility and the innovative performance of the financial institutions. Nevertheless, the results of the effect of competition in the financial sector, with an emphasis on the banks, are mixed. Some theories show that competition has positive impact, contrary to some other findings that showed limited effects. In order to have economic success and progress, economic freedom is needed. Hence, in this paper the Business Freedom Index is presented for Albania, Bulgaria, Greece, N. Macedonia and Serbia for 2019-2021. The competitive pressure in the market pressurizes the countries to perform better in the areas that can help them achieve progress.
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References
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27
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34. Scopelliti, A. (2009) Competition and economic growth: an empirical analysis for a panel of 20 OECD countries. University of Warwick, Department of Economics. Munich Personal RePEc Archive.
35. Stigler, G. (1988). Competition. In Eatwell, J., Milgate, M., and Newman, P. (eds), The New Palgrave: A Dictionary of Economics, 531-536.
36. Stucke, M. E. (2013) Is competition always good? Journal of Antitrust Enforcement. Vol. 1, No. 1, p. 162-197.
37. UNCTAD (2010), “The Role of Competition Policy in Promoting Economic Development: The Appropriate Design and Effectiveness of Competition Law and Policy”. Note by the UNCTAD secretariat, Sixth United Nations Conference to Review All Aspects of the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices, Geneva.
38. Velloso, J.P.R. (1991) International competitiveness and creation of an enabling environment. International competitiveness: Interaction of public and private sectors. Washington D.C.: The World Bank.
39. Yokoi-Arai, M. and Yoshino, N. (2006) Concept of competitiveness in the financial sector. Financial Research and Training Center, Financial Services Agency. Retrieved from: https://www.fsa.go.jp/frtc/seika/discussion/2006/20061020.pdf
40. Zoghlami, F. and Bouchemia, Y. (2021) Competition in the banking industry, is it beneficial? Evidence from MENA region. Journal of Banking Regulation. Vol. 22, p. 169-179.
2. Aiginger, K., et al. (2013) Competitiveness under new perspectives. European Commission-European Research Area. Retrieved from: https://www.oecd.org/economy/Competitiveness-under-New-Perspectives.pdf
3. Akis, E. (2015) Innovation and competitive power. Procedia-Social and Behavioral Sciences. Vol. 195, p. 1311-1320.
4. Aktan, C.C. (2015) Rekabet Gucu Kavrami. Canaktan web . Retrieved from: http://www.canaktan.org/yeni-trendler/yeni-rekabet/kavram.htm
5. Allen, F. and Gale, D. (2004) Competition and financial stability. Journal of Money, Credit and Banking. Vol. 36, No. 3.
6. Barth, J., et al. (2001) Bank regulation and supervision: What works best? World Bank Policy Research Working Paper 2725.
7. Besanko, D. and Thakor, A. V. (1992) Banking deregulation: Allocational consequences of relaxing entry barriers. Journal of Banking and Finance. Vol. 16, 909-32.
8. Boyd, J. H. and De Nicolo, G. (2005) The theory of bank risk taking and competition revisited. Journal of Finance. Vol. 60, No. 3, p. 1329–1343.
9. Carlson, M. and Mitchener, K. (2009) Branch banking as a device for discipline: Competition and bank survivorship during the great depression. Journal of Political Economy. Vol. 117, No. 2, p. 165–210.
10. Cherif, R., et al. (2020) Competition, competitiveness and growth in sub-Saharan Africa. International Monetary Fund. Retrieved from: file:///C:/Users/user/Downloads/wpiea2020030-print-pdf.pdf
26
11. Claessens, S. (2009) Competition in the Financial Sector: Overview of Competition Policies. International Monetary Fund. Retrieved from: https://www.imf.org/external/pubs/ft/wp/2009/wp0945.pdf
12. Cobbinah, J., et al. (2020) Banking competition and stability: Evidence from West Africa. National Accounting Review. Vol. 2, No. 3, p. 263–284.
13. Corbae, D. and Levine, R. (2019) Competition, stability and efficiency in the banking industry. European Central Bank. Retrieved from: https://www.ecb.europa.eu/pub/conferences/shared/pdf/20191216_4th_macroprud_conf/2019.12.16_Competition_stability_and_efficiency_in_the_banking_industry_Dean_Corbae.pdf
14. Cummins, J., et al. (2017) Competition, efficiency and soundness in European life insurance markets. Journal of Financial Stability. Vol. 28(C), p. 66–78.
15. Don, H., R. Kemp, and J. V. Sinderen (2008) Measuring the Economic Effects of Competition Law Enforcement. De Economist. Vol. 156, No. 4. 16. Dutz, M. A. and Hayri, A. (2000) Does More Intense Competition Lead to Higher Growth. Policy Research Working Paper; No. 2320. World Bank, Washington, DC.
17. Dutz, M. and M. Vagliasindi (2000), “Competition Policy Implementation in Transition Economies: An Empirical Assessment”, European Economic Review, 44(4-6):762-72.
18. Fagerberg, J. (1988) Industrial Competitiveness. The Economic Journal. Vol. 98, No. 391, p. 355–374.
19. Gommaa, M. M. (2014) Competition and economic growth: an empirical analysis with special reference to MENA countries. Topics in Middle Eastern and African Economies. Vol. 14, No. 2, p. 192-213.
20. Guzman, M. (2000) Bank structure, capital accumulation and growth: a simple macroeconomic model. Economic Theory. Vol. 16, 421-55.
21. Heritage website (2022) Business Freedom Index. Heritage website. Retrieved from: https://www.heritage.org/index/business-freedom
22. Kar, A. K. and Swain, R. B. (2014) Interest rates and financial performance of microfinance institutions: Recent global evidence. European Journal of Development Research. Vol. 26, No. 1, p. 87–106.
23. Kasman, A., et al. (2019) Stability, Competition, and Concentration in the Turkish Insurance Sector. International Journal of the Economics of Business. Vol. 27, No. 3, p. 1–21.
24. Keeley, M. C. (1990) Deposit insurance, risk, and market power in banking. American Economic Review. Vol. 80, No. 5, p. 1183–1200.
25. Lall, S. (2001) Competitiveness indices and developing countries: an economic evaluation of the global competitiveness report. World Development. Vol. 29, No. 9, p.1501–1525.
26. Marwa, M. G. (2014) Competition and Economic growth: An Empirical analysis with special reference to MENA countries. Topics in Middle Eastern and African Economies. Vol. 15, No. 2, p.192-213.
27. Melnyk, O. and Yaskal, I. (2013) Theoretical approaches to concept of “competition” and “competitiveness”. ECOFORUM, Vol. 2, No. 2(2), p. 8-12.
28. N. Yoshino, N. and Fujita, Y. (1996) Competition and Economic Welfare of Public and Private Financial Institutions. Economic Research, Vol. 47, No. 4, p313-323.
29. OECD (2009) Competition and Financial Markets. OECD website. Retrieved from: https://www.oecd.org/daf/competition/43067294.pdf
30. OECD (2011) Bank competition and financial stability. OECD website. Retrieved from: https://www.oecd.org/daf/fin/financial-markets/48501035.pdf
27
31. OECD (2021) Methodologies to measure market competition. OECD website. Retrieved from: https://www.oecd.org/daf/competition/methodologies-to-measure-market-competition-2021.pdf
32. Petersen, S. and Rajan, R. G. (1995) The effect of credit market competition on lending relationships. Quarterly Journal of Economics. Vol. 110, p. 407-443.
33. Reyes, G. E. and Useche, A. J. (2019) Competitiveness, economic growth and human development in Latin American and Caribbean countries 2006-20155: A performance and correlation analysis. Competitiveness Review, ISSN:1059-5422.
34. Scopelliti, A. (2009) Competition and economic growth: an empirical analysis for a panel of 20 OECD countries. University of Warwick, Department of Economics. Munich Personal RePEc Archive.
35. Stigler, G. (1988). Competition. In Eatwell, J., Milgate, M., and Newman, P. (eds), The New Palgrave: A Dictionary of Economics, 531-536.
36. Stucke, M. E. (2013) Is competition always good? Journal of Antitrust Enforcement. Vol. 1, No. 1, p. 162-197.
37. UNCTAD (2010), “The Role of Competition Policy in Promoting Economic Development: The Appropriate Design and Effectiveness of Competition Law and Policy”. Note by the UNCTAD secretariat, Sixth United Nations Conference to Review All Aspects of the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices, Geneva.
38. Velloso, J.P.R. (1991) International competitiveness and creation of an enabling environment. International competitiveness: Interaction of public and private sectors. Washington D.C.: The World Bank.
39. Yokoi-Arai, M. and Yoshino, N. (2006) Concept of competitiveness in the financial sector. Financial Research and Training Center, Financial Services Agency. Retrieved from: https://www.fsa.go.jp/frtc/seika/discussion/2006/20061020.pdf
40. Zoghlami, F. and Bouchemia, Y. (2021) Competition in the banking industry, is it beneficial? Evidence from MENA region. Journal of Banking Regulation. Vol. 22, p. 169-179.
Published
2022-10-25
Section
Banking and Finance
