Regulate one service, tame the entire market: Credit cards in Turkey
Journal of Banking and Finance, cilt.37, sa.4, ss.1195-1204, 2013 (SSCI, Scopus)
- Yayın Türü: Makale / Tam Makale
- Cilt numarası: 37 Sayı: 4
- Basım Tarihi: 2013
- Doi Numarası: 10.1016/j.jbankfin.2012.11.016
- Dergi Adı: Journal of Banking and Finance
- Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus
- Sayfa Sayıları: ss.1195-1204
- Anahtar Kelimeler: Credit card rates, Credit services, Interchange fees, Merchant discounts, Panzar-Rosse, Payment services
- Boğaziçi Üniversitesi Adresli: Evet
Özet
In credit card markets banks provide both payment and credit services. Two regulations were recently enacted in the Turkish credit card market: one on payment services in 2005 and the other on credit services in 2006. By employing the well-known Panzar and Rosse (1982, 1987) method and a unique quarterly data set for 21 Turkish banks between 2002 and 2008, we investigate the extent of banks' market power in the Turkish credit card market before and after the regulations. Unlike most of the existing literature, which considers competition and regulation for either credit or payment services and ignores the externalities between them, we consider the entire market by taking both services into account. Fixed effects estimations reveal that banks enjoyed collusive oligopoly power before the regulations. Although the first regulation did not have much impact, the second led to rises in both banks' total revenues and competition in the entire market. © 2013 Elsevier B.V.