The Evolution of Market Power in Iranian Banking Industry (2001-2010)

This article measures the market power in the loan and deposit markets in banking industry of Iran، including 10 state-owned and 4 private banks، during 1380-1389 (2001-2010) based on the evaluating of Lerner indices. To achieving this objective، a stochastic frontier cost function has been applied then market power was calculated. The main results of paper show over the observed period although market power in loan market has reduced، in deposit market it has increased. Outcome of calculations indicates some fluctuations in Lerner indices especially during (2005-10). So، it shows importance of economic policy aimed at removing the barriers of entry to market and regulation of them in order to make these markets more competitive.