The Business Practice and Performance of Commercial Banks

This chapter examines the evolution of the overall market structure of the commercial banking sector at macro-level following the post-crisis financial regulatory reforms and assesses its implications for the competitive landscape and business methodologies. It first determines that, notwithstanding increased foreign participation, foreign capital has been primarily channeled into sizable banks, while foreign banking entities represent a comparatively minor share of the market, culminating in pronounced market concentration and the maintenance of an oligopolistic framework. Secondly, through an analysis of profit-cost structures and bank lending behaviors, the study deduces that larger banks maintain greater profit margins, operational efficiency, and interest rate spreads compared to their smaller and medium-sized counterparts, including foreign banks. The marginal rise in profits, interest spreads, and the minimal alteration in expenses among large banks underscore the insufficient advancements in fostering market competition and fortifying the robustness of the banking system.