Testing for Competition in the Nigerian Commercial Banking Sector

Abstract

The study determined the degree of competition in the banking sector between 1990 and 2009 using Panzar and Rosse (PR) methodology. The data for the study were obtained from the annual reports and statement of accounts of fifteen commercial banks in Nigeria which were purposively selected for the study. The data collected were analysed using dynamic panel generalised method of moment estimation technique with fixed effect. The results of the analysis showed that the Nigerian commercial banks were characterised by monopolistic competition with H-statistic significantly dif- ferent from zero for all sample periods and sub-sample periods. The value of H-statistic ranged between 0.0925 and 0.1168. The study concluded that the banking industry in Nigeria exhibited monopolistic competition which supports the results obtained from previous studies in the developed economies.