Degree of competition in the Japanese securities industry

This paper investigates the competitive condition of the Japanese securities industry over the period 1983-2002 using the H-statistic proposed by Panzar and Rosse. Our results indicate that the Japanese securities industry was not in monopoly equilibrium in period 1 (1983-1988) and period 3 (1997-2002), while this possibility cannot be rejected in period 2 (1991-1996). Thus, competition decreased in period 2, then recovered in period 3, even compared with period 1. The industry has not been perfectly competitive, even though it has been undergoing financial reform.