Market structure and competitive conditions in the Arab GCC banking system

Saeed Al-Muharrami, Kent Matthews, Yusuf Khabari

Research output: Contribution to journalArticle

84 Citations (Scopus)

Abstract

This paper investigates the market structure of Arab GCC banking industry during the years of 1993-2002 using the most frequently applied measures of concentration k-bank concentration ratio (CRk) and Herfindahl-Hirschman Index (HHI) and evaluates the monopoly power of banks over the ten years period using the 'H-statistic' by Panzar and Rosse. The results show that Kuwait, Saudi Arabia and UAE have moderately concentrated markets and are moving to less concentrated positions. The measures of concentration also show that Qatar, Bahrain and Oman are highly concentrated markets. The Panzar-Rosse H-statistics suggest that banks in Kuwait, Saudi Arabia and the UAE operate under perfect competition; banks in Bahrain and Qatar operate under conditions of monopolistic competition; and we are unable to reject monopolistic competition for the banking market in Oman.

Original languageEnglish
Pages (from-to)3487-3501
Number of pages15
JournalJournal of Banking and Finance
Volume30
Issue number12
DOIs
Publication statusPublished - Dec 2006

Fingerprint

Market structure
Banking system
Qatar
United Arab Emirates
Kuwait
Monopolistic competition
Saudi Arabia
Bahrain
Oman
Statistics
Perfect competition
Bank concentration
Banking
Monopoly power
Herfindahl-Hirschman index
Banking industry
Concentration ratio

Keywords

  • Competition
  • Concentration
  • GCC countries
  • k-bank concentration ratio (CRk) and Herfindahl-Hirschman Index (HHI)
  • Market structure
  • Panzar-Rosse model

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Cite this

Market structure and competitive conditions in the Arab GCC banking system. / Al-Muharrami, Saeed; Matthews, Kent; Khabari, Yusuf.

In: Journal of Banking and Finance, Vol. 30, No. 12, 12.2006, p. 3487-3501.

Research output: Contribution to journalArticle

Al-Muharrami, Saeed ; Matthews, Kent ; Khabari, Yusuf. / Market structure and competitive conditions in the Arab GCC banking system. In: Journal of Banking and Finance. 2006 ; Vol. 30, No. 12. pp. 3487-3501.
@article{7db45de76e934410b6f5ca46da1ee807,
title = "Market structure and competitive conditions in the Arab GCC banking system",
abstract = "This paper investigates the market structure of Arab GCC banking industry during the years of 1993-2002 using the most frequently applied measures of concentration k-bank concentration ratio (CRk) and Herfindahl-Hirschman Index (HHI) and evaluates the monopoly power of banks over the ten years period using the 'H-statistic' by Panzar and Rosse. The results show that Kuwait, Saudi Arabia and UAE have moderately concentrated markets and are moving to less concentrated positions. The measures of concentration also show that Qatar, Bahrain and Oman are highly concentrated markets. The Panzar-Rosse H-statistics suggest that banks in Kuwait, Saudi Arabia and the UAE operate under perfect competition; banks in Bahrain and Qatar operate under conditions of monopolistic competition; and we are unable to reject monopolistic competition for the banking market in Oman.",
keywords = "Competition, Concentration, GCC countries, k-bank concentration ratio (CRk) and Herfindahl-Hirschman Index (HHI), Market structure, Panzar-Rosse model",
author = "Saeed Al-Muharrami and Kent Matthews and Yusuf Khabari",
year = "2006",
month = "12",
doi = "10.1016/j.jbankfin.2006.01.006",
language = "English",
volume = "30",
pages = "3487--3501",
journal = "Journal of Banking and Finance",
issn = "0378-4266",
publisher = "Elsevier",
number = "12",

}

TY - JOUR

T1 - Market structure and competitive conditions in the Arab GCC banking system

AU - Al-Muharrami, Saeed

AU - Matthews, Kent

AU - Khabari, Yusuf

PY - 2006/12

Y1 - 2006/12

N2 - This paper investigates the market structure of Arab GCC banking industry during the years of 1993-2002 using the most frequently applied measures of concentration k-bank concentration ratio (CRk) and Herfindahl-Hirschman Index (HHI) and evaluates the monopoly power of banks over the ten years period using the 'H-statistic' by Panzar and Rosse. The results show that Kuwait, Saudi Arabia and UAE have moderately concentrated markets and are moving to less concentrated positions. The measures of concentration also show that Qatar, Bahrain and Oman are highly concentrated markets. The Panzar-Rosse H-statistics suggest that banks in Kuwait, Saudi Arabia and the UAE operate under perfect competition; banks in Bahrain and Qatar operate under conditions of monopolistic competition; and we are unable to reject monopolistic competition for the banking market in Oman.

AB - This paper investigates the market structure of Arab GCC banking industry during the years of 1993-2002 using the most frequently applied measures of concentration k-bank concentration ratio (CRk) and Herfindahl-Hirschman Index (HHI) and evaluates the monopoly power of banks over the ten years period using the 'H-statistic' by Panzar and Rosse. The results show that Kuwait, Saudi Arabia and UAE have moderately concentrated markets and are moving to less concentrated positions. The measures of concentration also show that Qatar, Bahrain and Oman are highly concentrated markets. The Panzar-Rosse H-statistics suggest that banks in Kuwait, Saudi Arabia and the UAE operate under perfect competition; banks in Bahrain and Qatar operate under conditions of monopolistic competition; and we are unable to reject monopolistic competition for the banking market in Oman.

KW - Competition

KW - Concentration

KW - GCC countries

KW - k-bank concentration ratio (CRk) and Herfindahl-Hirschman Index (HHI)

KW - Market structure

KW - Panzar-Rosse model

UR - http://www.scopus.com/inward/record.url?scp=33750865438&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=33750865438&partnerID=8YFLogxK

U2 - 10.1016/j.jbankfin.2006.01.006

DO - 10.1016/j.jbankfin.2006.01.006

M3 - Article

VL - 30

SP - 3487

EP - 3501

JO - Journal of Banking and Finance

JF - Journal of Banking and Finance

SN - 0378-4266

IS - 12

ER -