Impact Of Industry Concentration Research Articles

The Impact of Industry Concentration on Stability: The Case of Indonesian Islamic-Commercial Banks

This study aims at investigating the impact of the banking industry’s concentration on the stability of Islamic commercial banks in Indonesia. This study used a single country setting of 14 Islamic-commercial banks in Indonesia from 2011 to 2020. The data utilized in this study comprised all Islamic-commercial banks' assets in Indonesia, excluding commercial banks with Islamic business units. The influence of concentration level on the stability of Islamic-commercial banks was investigated using a panel data model. According to Hausman's test, the fixed-effect model is more suitable than the random-effect model. The findings indicate that the “concentration-stability” hypothesis was supported-robust using two concentration level measurements: CR4 and HHI. It is implied that banks tended to be more stable at the higher competition level. From the bank’s specific characteristics, only the cost-to-income ratio significantly influenced the bank's stability, as expected. Other bank-specific characteristics, such as bank size, credit risk, and income diversity, had no substantial influence on observed bank stability. A robustness check was performed by estimating new models that included multiple control variables that did not change the effect of concentration level on the bank’s stability. This study adds to the literature by demonstrating the “concentration-stability” hypothesis in the Indonesian Islamic-commercial banking industry. Moreover, this study’s results confirm the previous study’s findings using different methods and measures of industry concentration. In addition, this study is relevant in the context of the merger action of three large Islamic commercial banks.

Did Industrial Centralization Strategy in Shanghai’s Suburbs Lead to Economic Growth?

Industrial centralization is an important policy choice in the industrial economy era. The purpose of this paper is to evaluate the overall performance and the influential effects of the industrial centralization strategy in the suburbs of Shanghai. The results show that (1) the strategy of industrial concentration in the suburbs of Shanghai effectively promoted economic growth; (2) on different spatial scales, there are visible differences in the impact of industrial concentration on the performance of industrial land; (3) industrial concentration has significantly improved industrial energy utilization efficiency; and (4) industrial concentration has narrowed the gap of economic development among the suburbs, but it has not resulted in a corresponding narrowing of the urban-rural gap. The main recommendations are to pay more attention to the high-end and centralization of urban industries in the central city, promote the interactive development of manufacturing and service industries as well as the integrated development of industry and city, moderately control the scale and speed of industrial suburbanization and residential suburbanization, promote the transformation of the traditional industrial land into “industry + R&D + business and office + exhibition” and further narrow the income gap between and within regions.

The Economic Imperative: Cities Need Migrants

The policy responses to Covid-19 have triggered large-scale reverse migration from cities to rural areas in developing countries, exposing the vulnerability of migrants living precarious lives in cities, giving rise to debates asserting to migration as undesirable and favouring policy options to discourage the process. However, the very basis of spatial concentration and formation of cities is presence of agglomeration economies, benefits accruing to economic agents operating in cities. Presence of these agglomeration benefits in local labour markets manifests themselves in the form of an upward sloping wage curve in urban areas. We estimate the upward sloping wage curve for various size classes of cities in Indian economy and establish the presence of positive returns to occupation and industry concentration at urban locations. Controlling for worker-specific characteristics influencing wages, we establish that higher the share of an industry or an occupation in local employment as compared to national economy, the desirability of firms to pay higher wages increases. For casual labourers, occupational concentration results in higher wages. However, impact of industry concentration varies across sectors. Results supporting presence of upward sloping urban wage curve, therefore, endorse policies to correct the market failure in cities and promote migration as a desirable process. JEL Classification Codes: J2, R2

Agglomeration externalities in Ecuador: do urbanization and tertiarization matter?

ABSTRACTThe paper investigates whether the tertiarization and rapid urbanization faced by developing countries favour agglomeration economies. Focusing on Ecuadorian cantons, a productivity equation is estimated using the generalized method of moments model with instruments controlling for endogeneity. The varying impact of industrial concentration, diversity, competition and density across industries is investigated and, for the first time, the implication of the level of urbanization on agglomeration externalities is studied. Stronger effects are found for services. The threshold of urbanization at which diversity, density and competition agglomeration externalities all generate positive effects was 33%, while they seem challenged by congestion in highly urbanized cantons.

The Impact of Industry Concentration on the Market's Ability to Anticipate Future Earnings: International Evidence

The existing literature has established the importance of industry concentration in explaining firm performance and information environments. However, little is known about whether and how industry concentration affects investors’ ability to anticipate future earnings. Our study investigates this query by identifying and testing two channels, (1) product market power and (2) intra-industry information transfer, through which industry concentration affects the informativeness of stock returns about future earnings (proxied by the future earnings response coefficient [FERC]). Using a firm-level sample from 38 economies, we find that industry concentration significantly enhances investors’ ability to predict future earnings. Further tests show that both product market power and intra-industry information transfer contribute to explaining the positive association between industry concentration and the FERC, with the former playing a more salient role. Finally, we show that a country’s effective competition law attenuates the positive impact of industry concentration on the FERC by weakening the economic impact of the two underlying channels. Our study contributes to the growing literature on the price-leading-earnings relation, industry concentration, and international corporate governance.

Who Benefits from Industrial Concentration? Evidence from U.S. Manufacturing

This article estimates the impact of industrial concentration on aggregate welfare as well as consumer and producer surpluses taking into account market power and cost efficiency effects. Using a sample of 232 U.S. manufacturing industries, empirical results indicate that an across-the-board increase in concentration would enhance aggregate welfare in 69 % of the industries due to widespread efficiency gains, although these accrue mostly to producers and are not passed on to consumers. Further results indicate that greater concentration is likely to enhance aggregate welfare in industries with low or moderate initial concentration that exhibit economies of scale and have greater exposure to international trade. However, consumers benefit only from increased concentration in industries whose initial levels are low and which face more import competition, lower exports and smaller markets. Producers benefit in symmetrically opposite ways, except for the case of low initial levels of concentration. In the absence of government intervention, Pareto improvements wherein everyone benefits from greater concentration are only guaranteed in industries with low levels of initial concentration in which efficiency gains yield price reductions that benefit consumers as well as producers.

A Study on the Impact of Industrial Concentration on the Economic Growth Based on the Analysis of Gini Coefficient of the Construction Regions

This paper reveals the concentration status of the construction industry in the 8 provinces of southeast China, its impact on the local communities, and proposes a tentative plan to stimulate local economy through industrial concentration based on the measurement and calculation of Gini coefficient in the 8 provinces and regression analysis of their population and output of steel and concrete.

Economics of access in a developing country: an analysis of firm‐conduct in financial services

PurposeThe purpose of this paper is to assess the impact of industrial concentration on the level of access to financial services in a developing country context. In most studies, price is the only variable that is used to assess conduct. In this paper, we extend the standard approach by assessing the impact of concentration on the level of access to retail financial services in South Africa.Design/methodology/approachTwo regression models have been specified and tested.FindingsIt is found – as with most of the literature – that concentration has an impact on the conduct of retail financial services firms. Specifically, the study illustrates that the pricing of retail banking products in South Africa fits with the structure‐performance hypothesis and secondly, the level of access to services is inadequate, does not meet the needs of consumers and is a symptom of market power and the absence of a competitive market in retail banking.Practical implicationsThe findings imply that there is a need for greater regulatory focus on the enhancement of social welfare in the retail banking sector in South Africa. There is also a need to develop policy and increase provision of basic infrastructure, in particular, electricity so as to reduce the cost of distribution, supply and intermediation of retail bank products.Originality/valueThe key contribution of this paper is that it delineates conduct into two parts. It separately illustrates that concentration in the financial services sector can adversely affect social welfare in two ways. First, as is well known, it increases prices second, it reduces the level of supply and access provided to points of need. This is believed to be the first study to explicitly do this in a developing country context.

The Impact of Industry Concentration and Firm Location on Export Propensity and Intensity: An Empirical Analysis of Chinese Manufacturing Firms

Recent export studies have focused on the internal/controllable determinants of export performance. The external/uncontrollable determinants of export performance have received scant research attention. In this study, the authors examine two key external/uncontrollable factors, namely, industry concentration and firm location, in the context of Chinese manufacturing firms. In addition, the authors include several frequently studied factors such as firm size, capital intensity, technology innovation, and industry in the analysis as covariates. On the basis of logistical regression and multiple regression analysis, the authors find that both domestic market concentration and firm location are potent predictors of Chinese firms’ export propensity and export intensity. The authors discuss implications of the findings to expose the reason behind the success of Chinese exporters in international markets.