Exploring banking competition in Croatia by using the Panzar-Rosse model

Abstract

The performance commercial banks in the Croatia have been widely studied, but there is little known about the examination of the nature of competition. For these reasons, it is important to investigate whether the banking sector in Croatia exerts monopoly or monopolistic behavior. This research empirically explores the nature of competition in the Croatian banking sector by covering 24 commercial banks between 2008 and 2018. In this vein, the panel data analysis was used along with H-Statistics. This study for Croatia and its findings confirms early findings of the existence of monopolistic competition in the most transition and developing countries. In fact, the findings obtained from this study reveals that the commercial banks in Croatia operate under monopolistic structure. Moreover, the results reveal that variable of RIETD, RLTA, RETA, and RDTA are statically significant. It indicates that banks operated in Croatia are focus more on traditional loans than other activities.