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The impact of competition/concentration on efficiency in dual banking system

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dc.contributor.authorKinan Salim
dc.contributor.supervisorMansor H. Ibrahim
dc.contributor.supervisorBaharom Abdul Hamid
dc.date.accessioned2017-08-28T05:47:54Z
dc.date.available2017-08-28T05:47:54Z
dc.date.issued2017
dc.description.abstractIslamic banks have proliferated and emerged as important players in the global banking industry especially in the Muslim-majority countries. The recent increase in the number and market share of Islamic banks has intensified the competition in this new industry. Despite its importance, the increasing competition in Islamic banking market not only from its own Islamic peers, but also from commercial banks has not been adequately addressed nor its consequences have been investigated. This thesis aims to shed the light on this important issue by investigating the effect of competition on the efficiency of both Islamic and conventional banks. Employing one-step stochastic frontier approach and a bank-level data set of 263 banks from 10 countries over the period 2001-2014, we find that both competition-inefficiency and the quiet life hypotheses work simultaneously. The basic finding supports competition-inefficiency hypothesis where the increasing competition in the banking market leads to decreases in the cost efficiency. Further investigation of the non-linear impact shows an evidence of quiet life hypothesis. Additionally, the negative effects of competition on cost efficiency is almost counterbalanced in highly concentrated markets. Interestingly, the findings show that the positive impact of concentration on efficiency is higher for Islamic banks compared to conventional banks, and the quiet life hypothesis is less probable to exist in Islamic banks due to their distinct business model and corporate governance. The findings of this thesis draw important policy implications. Regarding pro-competitive policies, regulators in low and moderate concentrated market face a trade-off between social welfare and cost efficiency. In contrast, adopting pro-competitive policies in highly concentrated markets will generate social welfare without harming banks efficiency. For full-fledged Islamic banks, in order to survive the intense competition, they may look for strategic mergers to benefit from economic of scale. Alternatively, Islamic banks may adopt a product differentiation strategy by creating and emphasizing the ethical values in their products which are in line with the ultimate Shariah objectivesen_US
dc.identifier.citationSalim, K. (2017). The impact of competition/concentration on efficiency in dual banking system (Doctoral dissertation). INCEIF, Kuala Lumpur. Retrieved from https://ikr.inceif.org/handle/INCEIF/2653en_US
dc.identifier.urihttps://ikr.inceif.edu.my/handle/INCEIF/2653
dc.languageEnglish
dc.language.isoengen_US
dc.publisherINCEIFen_US
dc.rights2017. INCEIF
dc.sourceGS
dc.subjectIslamic banksen_US
dc.subjectConventional banksen_US
dc.subjectMuslim countriesen_US
dc.subjectCompetitionen_US
dc.subjectEfficiencyen_US
dc.titleThe impact of competition/concentration on efficiency in dual banking systemen_US
dc.typePhDen_US
dlc.maintopicIslamic bankingen_US
dspace.entity.typePublication
ikr.doctypeTheses
ikr.licenseAvailable in physical copy and downloadable format (Call Number: t HG 3368 A6 S165)
ikr.topic.maintopicIslamic bankingen_US
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