Market Power and Bank Profitability: Evidence from Montenegro and Serbia

Abstract This study investigates the relationship between profitability and market power in banking sector using data from financial reports of banks that operated Serbia Montenegro, covering period first quarter 2010 to last 2019. In order investigate this relationship, determinants bank are split internal external. As external determinants, selected ratios concentration were calculated used measure power. The total sixteen panel regression models applied, eight for each country. results indicate variations return on assets equity can be explained by concentration. On other hand, model applied Montenegro does not give enough argument support such explanation, efficiency some extent.