Effects of Market Concentration on the performance of Bank System in Iran

In economic theories, every market contains three main elements of function, competiveness, behavior and structure. Competitiveness is one of the main elements of the market structure that can be affected by other components of the market. The function of bank system has always been reflected in indexes such as profiteering, competitiveness and their proficiency that these variables themselves must basically be affected in a coherent framework rather than other factors. For successful policymaking and their implementations in the bank system of the country we have to recognize the quality of relationship between the structure and function of the bank system and according to the nature and the manner of these elements’ correlation, we can determine the form and organization type of the market. The goal of this research is to investigate the effects of market concentration on the function of bank system in Iran. In the correlation estimation of market concentration and the function of public and private banks of Iran, panel data method has been used within the years of 1384 to 1392; out of which the following results are concluded: The variables of concentration, inflation, the volume of money, and the ratio of bank facilities to the total bank system assets, have positive effect and the variables of risk, and public banks profit rate have a negative effect on bank systems in Iran