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Journal of Banking Regulation

, Volume 20, Issue 2, pp 124–135 | Cite as

Is the MENA banking sector competitive?

  • Hatem ElfeituriEmail author
  • Konstantinos Vergos
Original Article
  • 106 Downloads

Abstract

The purpose of this paper is to investigate the competitive conditions and revenue drivers of commercial banks in the MENA region in the context of Panzar–Rosse model. It is the first study of its kind that examines a large sample of MENA banks for an extensive period (1999–2012) during an era of political and economic unrest and transformation that includes the global financial crisis (2007–2009). Panel data analysis using fixed effects was employed in order to examine whether the competitive conditions in MENA banks is explained by monopoly, monopolistic competition or perfect competition. Findings show that MENA banks operate under monopolistic competition, and bank-specific variables show a positive impact on revenue. These findings indicate that policymakers should relax capital adequacy requirements to guarantee the stability of the financial system. They also raise a concern that commercial banks in the MENA economies tend to concentrate on traditional lending activities, where their competitive position may be eroded in the long run by the decreasing state role of Islamic banks and by mergers that are not empirically justified for MENA banks during this period.

Keywords

Panzer and Rosse Competition Revenues Deregulation MENA 

JEL Classification

G21 F30 G20 

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Copyright information

© Macmillan Publishers Ltd., part of Springer Nature 2018

Authors and Affiliations

  1. 1.University of East LondonLondonUK
  2. 2.University of BenghaziBenghaziLibya
  3. 3.Portsmouth Business SchoolUniversity of PortsmouthPortsmouthUK

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