EFFICIENCY AND MARKET POWER OF THAI BANKS: IN THE AFTERMATH OF FINANCIAL CRISES

This paper studies, over the 1993-2010 period, the evolution of the market power (Lerner index) of the banks in Thailand as well as the cost efficiency scores on two main banking markets - lending and investment activities - and on the whole banking market Its objective is to measure the impact of the 1997-1998 crisis and of the consecutive reforms, as well as of the 2007-2008 crisis, on the competitive behaviour and cost efficiency scores of the Thai banks. All in all, results show that, during the crisis of 1997-1998, competition among banks increased, and then dropped after this crisis. The recent crisis did not have any impact on the market power of the Thai banks regarding their traditional lending activities and their activities as a whole. As for cost efficiency, it decreased following the crisis of 1997-1998 for the lending activities, and on the whole market over the 1995-2000 period. The recent crisis did not have any effect on the efficiency of the banks in Thailand too.