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The Degree of Competition in the Thai Banking Industry before and after the East Asian Crisis

Discussion Papers

No.056

March 2006

ABSTRACT

This paper analyzes the influence of the East Asian crisis and the subsequent reforms on the oligopolistic nature of the Thai banking industry. Since the crisis, there have been substantial changes in competitive environment, including a decline in the family ownership of banks as well as the arrival of new entrants. How did these changes affect a banking industry in which the six largest local banks accounted for over 70 percent of market share? The estimated Lerner index from Bresnahan's [1989] conjectural variation model indicates the possibility of a decline in the degree of competition.

Keywords: Thai banking industry, degree of competition, Lerner index
JEL classification: G21, L13

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