Assessment of the Development of Competition in Regional Financial Services Markets

Widely introduced competitive mechanisms (including in the financial services sector) require an assessment and measurement of the level of competition. Nowadays, the methods applied in practice are usually based on the calculation of indicators characterising market concentration. Simultaneously, little attention is paid to how consumers of services (represented by the population and business) assess the development of competition. Thus, the article presents a methodology for assessing the level of competition, which considers, among other things, the opinion of consumers. The methodology calculates a cumulative point score according to two groups of factors. The first group includes the so-called objective factors of competition development (independent of subjective opinion of consumers), while the other group presents subjective consumer assessments. The initial data for calculating the subjective component was gathered from population and business surveys. The assessment of objective factors is based on the materials of the Bank of Russia, as well as information published in open sources (financial reports of credit institutions, statistical databases of the Federal State Statistics Service, etc.). The proposed methodology was tested on various of regional financial markets: banking services, services of microfinance organisations, insurance. According to the obtained estimates, the examined markets can fall into one of three categories, namely, a market with developed competition, a market with insufficiently developed competition or a market with undeveloped competition. The calculation results show that the insurance market can be considered a market with developed competition in half of the analysed regions; the rest belongs to the category of markets with insufficiently developed competition. Based on the findings, it is possible to conduct a comparative analysis of the development of competition for individual markets and regions in general, as well as to examine relevant factors. In addition, objective competition and the development of competition noted by consumers of services can be compared.