Banking concentration in the Baltic and Western Balkan states - selected issues

In a rapidly changing economic environment companies deepen their cooperation, which entails in all sectors of the economy. The progressive increase in market concentration, especially in the banking sector, has a purpose, which is to increase the benefits from the operation of various enterprises, e.g. credit institutions. The purpose of this article is to compare the tendencies within market structures in various countries which origin from similar political systems and which have got experience in transformation of banking sectors. The research concerns the Baltic and Western Balkan states. The study revealed a distinct change in the growth rate of market concentration and the number of banks. The article is divided into two main parts. The first part consists of an analysis of the literature on the concentration of the banking market. It presents a discussion on the effects of changes in market structures, leading to an increase in its consolidation. The second part is devoted to empirical research in relation to changes in the degree of concentration of the banking sectors (using concentration ratios) and the number of banking institutions operating there. These sectors are divided into two groups: selected member states of the European Union (Lithuania, Latvia, Estonia) and the Western Balkan countries (Croatia − new member of the EU, Serbia, Bosnia and Herzegovina). In this section there are detailed descriptions of the banking markets' structures.