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Ups Vs. Fedex

Contents Page
Introduction 1
Jamaica's Banking Sector 2-3
Non-Price Competition 4
Interest Margin 5
Customer Choice 6
What is Interest Rate 7-10
Graphs
Tables
Conclusion 11
Bibliography 12

Introduction
Since the early 1990s, the Jamaican banking sector has experienced significant structural changes stemming from a disorderly financial liberalization process, which preceded a severely disruptive financial crisis. As such, the last decade has important lessons about factors influencing the relationship between competition and concentration, which has been unexplored. Over the last few months commercial banks have been under fire for their high-loan interest rates and wide spread between their fixed deposits savings accounts and lending rates.

Commercial banks within Jamaica operated under an Oligopoly market structure because there are not many commercial banks and the decision of one affects all the others. The banks use non-price competition to compete against each other not necessarily with price but mainly through promotional strategies.

Jamaica's Banking Sector
Jamaica's approximate 2.5 million bank customers enjoy the benefits of strong competition in a deregulated banking system. The dilemma is that we only get benefits from non-price competition while the real benefits of lower lending rates and higher deposit rates are nothing but a fleecing illusion to be pursued but never attained. Jamaica commenced moving from a regulated banking system to a more open competitive sector in the 1990s. While competition has affected many areas of the banking industry, there are two areas that illustrate this change more than others: marketing promotions and product choice. This competition however, has not brought about significant savings for customers due to the Oligopoly market conditions that exists, thus a much narrower choice of commercial banks are now available to the...