Affiliation:
1. Faculty of Economics, University of Kragujevac
Abstract
Foreign direct investment (FDI) is an important factor in economic
development. The impact of FDI on the host country is achieved by
transferring capital, knowledge, technology, organisational structure, and
strategies. In addition, FDI affects the condition of competition in host
country markets, which is the focus of this study. Our purpose is to
estimate the impact of FDI on market concentration and competition
conditions using the example of the Serbian banking market. The
autoregressive distributed lag (ARDL) approach was used to test the long-
and short-run relationship between market concentration, FDI, and the number
of banks from Q4 2004 to Q2 2019. The results suggest that increases in FDI
volume reduce the Serbian banking market?s concentration level in the long
and short run. On the other hand, a decrease in the number of banks leads to
an increase in market concentration in the long and short run. Our study?s
recommendation for competition authorities is to pay more attention to the
concentration of undertakings, especially in financial sectors such as the
banking market. The process of concentration of undertakings carries a high
risk of violating competition conditions, and authorities need to mitigate
this risk.
Publisher
National Library of Serbia
Subject
General Economics, Econometrics and Finance
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