Degree of competition in the Japanese securities industry

This paper investigates the competitive condition of the Japanese securities industry over the period 1983-2002 using the H-statistic proposed by Panzar and Rosse. Our results indicate that the Japanese securities industry was not in monopoly equilibrium in period 1 (1983-1988) and period 3 (1997-2002), while this possibility cannot be rejected in period 2 (1991-1996). Thus, competition decreased in period 2, then recovered in period 3, even compared with period 1. The industry has not been perfectly competitive, even though it has been undergoing financial reform. (C) 2005 Elsevier Inc. All rights reserved.