Twice a Year Scientific Journal

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124 Economic Analysis (2010, Vol. 43, No. 1-2, 117-125) Chart 6. Market shares (credits) 4 Chart 7. Market shares (deposits) 4 The situation on credit market during the years 2004 and 2008 changed significantly. The bank with leading role in 2004 dropped to second place in 2005 and since 2006 it declined to third rung. The bank which won the leadership in 2005 remained at first place until 2007. In the following year the difference between MS 1 and MS 2 was minimal and the leading position was overtaken by the bank with the second largest market share of loans. These findings correspond with the development of the recent years. Due to the high economic growth we could observe easening of credit conditions and competitive fights between commercial banks. Analyzing the level of competition by using the market shares of 3 major banks brought us, especially for the credit market, opposed conclusions as the analysis of market concentration using the HHI index. While the HHI index (and also partly CR3 and CR5 index) informed us about the stagnation or increase of market concentration, market share analysis demonstrated a highly competitive fight between commercial banks. Conclusion A general rule about countries with a small market is that they have a high degree of concentration. In Slovakia, more than 50% of banking sector assets is held by the three largest banks and approximately 70% is held by the five largest market players. Such a situation refers to a higher concentration, but compared with other ʺnewʺ EU countries we belong among the moderate above-average. Analysis of the market share of three largest banks has shown us competition and a decreasing position of the leading bank. On one hand, the situation in retail sector, where there is a permanently higher level of concentration than in the corporate sector, is caused by unconcerned consumers. On the other hand, the fact is that the three largest players on the banking market are banks with the longest history. Two of them operate on the Slovak market for more than 50 years and they inherited a number of clients from the previous socialist era, when bank did not need to fight for a client.
Střelecká, Z., Competition in Banking Market in Slovakia, EA (2010, Vol. 43, No. 1-2, 117-125) 125 Recently, the situation has changed dramatically. Except for the entry of few new players (most recently in November 2007), the Slovak banking sector was marked by the adoption of the euro and economic crisis. These two factors caused the decrease of profitability of the banking sector and both sides of the balance sheet were affected. One of the potential benefits of euro adoption should be an increase of competition but so far the development did not show such benefit. It will be questionable whether the future development will bring strengthening or weakening of the position of three biggest players. References European central bank. 2005. EU banking structures. Frankfurt am Main: European central bank. Kočišová, Kristína. 2008. “Konkurencia na slovenskom bankovom trhu”. Biatec, 16/2008 (10): 20-25 Tokárová, Mária, and Rievajová, Eva. 2007. “Inovácie vo vývoji prístupov k teóriám konkurencie, súťaživosti, resp. protimonopolnej politiky.” http://semafor.euke.sk/zbornik2007/pdf/tokarova _rievajova2.pdf Article history: Received: 13 January 2010 Accepted: 14 March 2010
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PUBLISHER Institute of Economic Sci
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C O N T E N T S The Upsurgence of C
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Guest Editor’s Notes The current
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Matray, M., The Upsurgence of Clust
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