Validation Panzar-Rosse Model in determining the structural characteristics of Tunisian banking industry

This paper investigates the market structure of banking industry in Tunisia and evaluates the degree of competition. The current analysis employs a widely used non-structural methodology put forward by Panzar and Rosse (1987), the so-called H-statistic, and draws upon a comprehensive panel dataset of Tunisian banks covering the period 1999 to 2008. The estimated H statistics for the whole sample periods are positive (0.67 and 0.71) and the Wald test for the market structure of monopoly or perfect competition is rejected, implying that the banks in Tunisia earned their revenue in the condition of monopolistic competition.   Key words: Market structure, competition, concentration, Panzar and Rosse methodology.