Measuring competition in Iran’s Commercial Banking Sector

The main purpose of this article is to evaluation of the degree of competition in Iran’s banking industry. To meet this ends the data of 18 active banks over 2006-2014 was used. Moreover, this study sought to determine behavioral pattern of banks using the demand and supply equations in deposit money market. Also, the demand and supply equations estimated using fixed effect two stages least square method. The results indicated Iranian banking operate in the oligopoly situation. The comparison of calculated behavioral pattern in Iranian banking industry (θ=0.0273) with the conjectural variation in the Cournot competitive condition (θ=1/n*=0.00102) confirmed the depletion of competition in Iran’s banking industry, it means that deposit market display an oligopoly structure

Keywords:

Iranian Banking Industry , Conjectural variation , Competition , Bresnahan-Lau’s model