Determinants of Entry in Banking Market of Malaysia

The decision and the timing of entry are sensitive to condition and cyclical disturbances. The lack of entrants¿ paying attention to market structure as main determinant of entry is resulted in wastage of resources. Malaysian authorities of banking sector do not pay much attention to the importance of entry condition; market structures, entry barriers as well as entry incentives. This study attempts to evaluate the structure of the Malaysian banking sector by studying estimations of entry phenomena in this sector during the time period of 1985-2005. This study covers panel data analysis. The results of this study reveal several noteworthy findings. While evaluating entry equation, it was found that entry is highly sensitive to profit growth and population. Also, the estimated entry equation suggests that a less competitive process is at banking sector of Malaysia.