Returns to market power in financial institutions

Research output: Contribution to journalArticle

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Abstract

The strong positive relationship between firm profits and size for Thai financial institutions cannot be explained by returns to scale or scope. Evidence for this statement is found by applying both production frontier and function techniques and different model specifications on data covering 1991 to 1995 for Thai banks and finance & securities companies. Increasing returns to market power is the only way to explain the Thai data. A firm enjoys returns to market power if the bigger the firm, the higher the price it can charge and/or the lower the price it has to pay for inputs.

Original languageEnglish (US)
Pages (from-to)268-291
Number of pages24
JournalJournal of the Asia Pacific Economy
Volume11
Issue number3
DOIs
Publication statusPublished - Aug 1 2006

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Keywords

  • Financial institutions
  • Market power
  • Returns to scale
  • Returns to scope

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development
  • Political Science and International Relations

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