Comparative Economic Studies

, Volume 53, Issue 2, pp 291–306 | Cite as

Do Islamic Banks Have Greater Market Power?

  • Laurent Weill
Regular Article

Abstract

The aim of this paper is to investigate whether Islamic banks have greater market power than conventional banks, as they might benefit from a captive client base. To measure market power, we compute Lerner indices for a sample of banks from 17 countries where Islamic and conventional banks coexist over the period 2000–2007. We also use the Rosse-Panzar model to measure the degree of competition for each type of banks. We find that Islamic banks do not have greater market power than conventional banks. We attribute the competitive behavior of Islamic banks to differences in norms and incentives.

Keywords

Islamic banks Lerner index Bank Competition 

JEL Classifications

G21 D43 D82 

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Copyright information

© Association for Comparative Economics 2011

Authors and Affiliations

  • Laurent Weill
    • 1
  1. 1.University of Strasbourg – EM Strasbourg Business SchoolStrasbourgFrance

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