The purpose of this paper is to investigate the industrial organizational features of the financial markets in Thailand which may play an important role in promoting the recent high economic growth. Specifically, we examine whether or not the market‐structure‐performance hypothesis is valid by estimating profit and cost functions. The main results are as follows:1) market concentration in Thailand is higher than in Japan;2) expense rate of Thai commercial banks is considerably higher than Japanese banks;3) economies of scale are not found;4) the more concentrated the market is, the larger are the profits and costs of the commercial ba