Sanat ve Sosyal Bilimler Fakültesi
The Role of Simultaneous Regulations of Credit Services and
Payment Services on Competition
In credit card markets, banks earn revenue from both credit services and paymentservices of credit cards. Existing literature concentrates either on credit services and investigates whether credit card rates should be regulated, or on payment services and examines whether merchant discounts or interchange fees should be regulated. Correct identification of banks’ market power requires the analysis of banks’ total revenues. By employing the well-known Panzar and Rosse (1982, 1987) method, and taking revenues from both credit and payment services into account, we find that the Turkish credit card market typifies monopolistic competition. We also conclude that the recent interest rate regulations have increased the overall competitiveness of the market. Lastly, contrary to expectations, we observe that both interest and non-interest revenues of banks increased after the regulations.