ساختار بازار، اجرای بانک و عملکرد بانکی: شواهد از ASEAN Market Structure, Bank Conduct and Bank Performance: Evidence from ASEAN nations

1. Introduction The structure conduct performance (SCP) hypothesis predicts that banks in concentrated markets collude to charge higher loan rates, pay lower deposit rates and earn higher profits (Park & Weber, 2006; Webster, 2011; Mirzaei, Moore, & Liu, 2013).4 Therefore, the policy implications of SCP require that the consolidation activates must be scrutinized/monitored. Nonetheless, the traditional approach to empirically test the SCP hypothesis is flawed and can be misleading (Homma, Tsutsui, & Uchida, 2014). For instance, the traditional tests of SCP ignore the role of bank conduct and directly relate the bank concentration to some measure of bank performance. A positive relationship between concentration and profitability is considered as an evidence in support of SCP assuming that the concentration leads to higher profitability through monopoly pricing.5 However, the existence of a positive relationship between bank concentration and profitability is not enough to suggest that higher profitability is a result of monopoly rents.6 Accordingly, the policy implications – i.e. monitoring/scrutiny of consolidation activities – based on traditional tests of the SCP hypothesis can be misleading. For example, it is possible that the relationship between concentration and profitability is explained by other factors such as cost efficiency and/or product quality. Consequently, it becomes immensely relevant for antitrust policy to examine whether the monopoly pricing is driving the relationship between bank concentration and profitability. Otherwise, antitrust measures based on traditional tests of SCP can be counterproductive. The policy implications of SCP are important in context of Association of South East Asian Nations (ASEAN) for ongoing structural changes in its banking industry. Following the Asian financial crisis 1997-1998 and the Global financial crisis 2008-2009, several policy measures – i.e. bank consolidations, international financial integration, privatization, deregulation, and financial reforms – were undertaken by regulatory authorities to ensure the stability of the banking sectors (Yokoi-Arai & Kawana, 2007; Olivero, Li, & Jeon, 2011b, 2011a; Khan, Ahmad, & Gee, 2016a, 2016b). Such deliberate measures have moved the banking industry in ASEAN towards a more concentrated market structure.7 During the same period, the bank profitability has also increased but the cost efficiency has declined.