Structure And Performance Of The Philippines Banking Market

• Main Author: Rozlina, Rosli
• Format: Final Year Project Report
• Language: English
• Published: Universiti Malaysia Sarawak, (UNIMAS) 2013
• Subjects: HG Finance
• Online Access: http://ir.unimas.my/id/eprint/37798/1/Rozlina%20Rosli%20ft.pdf; http://ir.unimas.my/id/eprint/37798/

This study aims to investigate the nexus between the market structure, efficiency and performance of the Philippines' universal and commercial banks. In this study, 18 universal and commercial banks in Philippines are analyzed. This study applies the Data Envelopment Analysis (DEA) in measuring the efficiency of banks. Concentration ratio and Herfindahl-Hirschman Index (HHI) are used to determine the market structure of banks. In order to investigate the factors affecting the performance of banks, the market structure and efficiency are regressed on the profitability ratios of banks. It is found that the market structure affects the banks' profitability positively, when it is regressed on the ratio of profit before tax to shareholders' equity (RROEB). Meanwhile, banks' efficiency correlates positively when the ratio of net interest margin to total assets (NIMTA) is used as the dependent variable. The mixed results obtained in this study suggest that the decisions on increasing concentration ratio and improving efficiency to increase the profitability of banks cannot be achieved simultaneously.