Measuring Competition of the Financial Securities Industry in Korea

Since the brokerage fee was liberalized in late 1990s, the competition in financial securities market is thought to be escalated. The traditional measure for competition such as HHI, however, seems to indicate that the market competition gets lowered contrarily. I apply the idea of Panzar and Rosse (1987) and Boone (2008) to meter how contestable the Korean financial securities market has been from 2002 to 2015. Unlike HHI, H-statistics by Panzar and Rosse (1987) demonstrates that the degree of competition has increased from "monopolistic competition" to "perfect competition." Yet Boone indicator does not provide useful prediction.