Essays on the imperfect competition in banking

Date

2025-4

Author

Per, Emre

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Main objectives of this study are to investigate the effects of the spatial competition and market dominance among banks on loan and deposit interest rate determination, branch distribution, and the potential impacts of digital disruption on the banks’ market structure and branch networks. The dissertation consists of four essays. The first essay establishes a theoretical foundation, exploring industrial organization concepts and literature on imperfect competition in banking. The second essay develops a theoretical bank spatial competition model based on Salop’s circular city framework to analyze collusive pricing strategies. In addition to analyzing pricing behavior across different market structures using a model that incorporates price competition and spatial differentiation, this study also extends the model to examine tacit collusive behavior in an infinitely repeated game. The third essay analyzes the evolution of banking services, focusing on spatial competition, digitalization and leverage. It assesses how diversified customer access channels reshape the competitive landscape and whether these changes push the sector toward monopolistic competition or reinforce oligopolistic structures. The fourth essay investigates the determinants of city-level distribution of bank branches, incorporating socio-economic and competitive factors. This study is particularly unique in the context of the Turkish banking sector. The empirical findings indicate that the number of bank branches is positively associated with population size and GDP per capita in U.S. dollars, while negatively related to market concentration. Additionally, bank sizes, types, development strategies, and city-specific market saturation levels play a crucial role in shaping bank branch networks.

Subject Keywords

Spatial competition, market structure, Nash equilibrium, digitalization, bank branch networks

URI

https://hdl.handle.net/11511/114206

Collections

Graduate School of Social Sciences, Thesis