Atousa Goodarzi - Associate Professor, ECO College of Insurance, Allameh Tabatabai University,
Afsaneh Shafiee - Senior Researcher, Institute for Trade Studies and Research, Ministry of Commerce

This paper analyzes Iran s banking market structure, using unbalanced panel data models during 1997-2009. To study the market structure, various measures of market concentration are examined theoretically and the U index of concentration is applied to Iran s banking system. The results show that, along with the commencement of privatization in Iran s banking sector (2001), U index of concentration has tended to decrease, indicating that competition in Iran s banking market has intensified. However,this may not happen until the strict regulations on private banks are relaxed.

Market Structure, Cost Function, Banking Industry, Multi-level Models, Iran s Banking Sector