Banking Rehabilitation Policy: Impact on Competition in the Banking Sector

This research is devoted to determining the nature of the influence of concentration processes on the level of bank competition in the context of the rehabilitation policy. Measuring the degree of concentration of the Russian banking sector using the Herfindahl-Hirschman index (HHI) indicated moderate concentration according to the classification approved by Russian law. Based on the Panzar-Ross approach, it was concluded that the banking market as a whole is characterized by a regime of monopolistic competition. The dynamics of the quarterly H-stat competition indicator showed a significant weakening of the competitive environment after the start of the Bank of Russia active rehabilitation policy at the end of 2013. Measuring the level of competition among various groups of banks allows us to conclude that large and medium-sized banks interact in conditions close to perfect competition. As part of assessing the impact of banking sector concentration processes on competition in the banking services market in terms of the rehabilitation policy, hypotheses were formulated on the nature of the influence of the concentration index, the efficiency parameter of banks and the dummy variable of the Central Bank’s policy on the level of interbank competition. The results of the regression analysis fully confirmed the hypotheses put forward about the negative impact on the level of competition of the factors listed above.