Author(s)

Xiaonan Peng

Corresponding Author

Xiaonan Peng

Abstract

This paper describes an empirical assessment of the bank competition status in Hong Kong during the period of 2005 to 2012. In addition, it examines whether the 2008 financial crisis has changed the competition status in Hong Kong. The Panzar-Rosse approach is applied during estimating the panel dataset of 19 banks in Hong Kong. It divides the whole period of 2005 to 2012 into two separate periods, which are 2005 to 2007 and 2008 to 2012, in order to test for the structural change in 2008. The empirical results of this paper based on Panzar-Rosse indicates that the overall bank competition in Hong Kong during the period from 2005 to 2012 is monopolistic competition which can also be classified as a monopoly or conjectural variation short-run monopoly. The Wald test for the 2008 financial crisis shows that there are statistically changes in the competition condition of the banking sector in Hong Kong. However, both the competition situation of the two periods can be classified as monopolistic competition or monopoly, but the competition condition after 2008 seems higher than that before 2008 from the H-statistic.

Keywords

Hong Kong, Bank competition, Financial crisis, Panzar-Rosse model