Competition and Collusion in the Turkish Banking Industry

Aydemir R.

EMERGING MARKETS FINANCE AND TRADE, vol.49, pp.31-40, 2013 (SSCI) identifier identifier


I consider the Turkish banking industry, which is dominated by a few large banks, and taking up a conjectural variation approach, I estimate a structural model to examine the market conduct of the largest banks for the period 1988-2009. The estimation results suggest that Turkish banks colluded in the loan market during the sample period. This evidence demonstrates that there is a conflict between market concentration and competition in the Turkish banking industry. Thus, in order to protect competition, regulatory agencies should be cautious of efforts that may increase concentration in the banking industry.