Assessing Market Structure in Iranian Banking Sector Based on the Multiproduct Approach

Abstract

This article’s first aim is to find, the primary level of poly-product in Iranian banking section that causes the layout of the market between the banks become lower and bank concentration higher. To do that we use, the instance of Omni-product banks which is one of the most common approach developed by Penza & Rosse (1987). The first strand is related to bank cost function; and the other one to earnings multiproduct approach.In evaluating this experience-based examination and defining the effects of Omni-production on market penetration, we have applied a structural model to estimate demands on deposit services with study’s result like banks presenting traditional services such as loans and ATM cards. Additionally same modern facilities like brokerage services and capital bonds are of further market power versus those with only basic services. The economies of scope degree is sized via cost saving in scale of percentage which is produced through added figures of fruitful activities in comparison with only individual yield of product. Thus, so as to empirically distinguish economies of scope in poly-product banks, no.1 level of our investigation include modeling and speculating the function of bank’s cost.