Two aspects of concentration in Serbian banking sector

• Main Authors: Ljumović Isidora, Pavlović Vladan, Cvijanović Janko M.
• Format: Article
• Language: English
• Published: Economics institute, Belgrade 2014-01-01
• Series: Industrija
• Subjects: bank concentration; bank-based systems; bank consolidation; Herfindahl-Hirschman Index; Concentration ratio
• Online Access: http://scindeks-clanci.ceon.rs/data/pdf/0350-0373/2014/0350-03731403061L.pdf
• ISSN: 0350-0373; 2334-8526

This paper aims to approach concentration in the banking industry from two perspectives. Broader analysis shows that capital markets are underdeveloped and that Serbian financial system is bank based. Analysing the concentration from a more narrow perspective, authors concluded that the banking sector in Serbia is characterized as a highly fragmented one, but the reduction in number of banks did not lead to an increase in the concentration of any of the analysed parameters, thus the level of concentration is moderately low. Detail analysis of selected countries was performed as comparative analysis. Unfortunately, it was impossible to make a universal conclusion about whether reducing the number of banks affects positively or negatively the level of concentration.