scholarly journals Measuring Competition in Banking Sector in Oman

2020 ◽  
Vol 1 (2) ◽  
pp. 34-43
Author(s):  
Amira Al Maamari
Keyword(s):  
Banking Sector ◽  
Structural Model ◽  
Monopolistic Competition ◽  
Policy Implications ◽  
Foreign Banks ◽  
Securities Market ◽  
Competitive Environment ◽  
Competitive Condition ◽  
Banking Competition ◽  
Equilibrium Market

Purpose of the study: The purpose of the study was to investigate and measure the competitive environment in the banking sector in Oman. Design/Methodology/Approach: This study considered an effort towards measuring the nature of competition of 12 out of 16 Omani banks from 2009 to 2019 over applying Panzar and Rosse (PR-model). It measured the competition index, called H-statistic, as it gives a quantitative assessment of the competitive nature of the studied market. The non-structural model was adopted to measure the competitive behavior of the banking sector. The data was taken from Muscat Securities Market (MSM) over obtaining financial statements of banks and data was tested using the Statistical Package for Social Sciences (SPSS). Findings: The result showed that it was not able to reject the monopolistic competition that H value considered between values of zero and one for the banking market in Oman. Thus, Omani banks operate under monopolistic competition. Practical Implications: The study has interesting policy implications. It is recommended to encourage foreign banks' presence to enhance the competitive condition of the banking sector thus making sure the exit and the entrance of banks in the industry to raise the competition. Social Implications: The flexibility in the competitive condition of the banking sector will lead to an increased competition so this will produce a variety of services and products to improve the banks’ performance and customer satisfaction. Originality/value: This is the first study of its kind in studying and testing the competitive environment for the banking sector in Oman using the PR-model. Keywords: Banking Competition in Oman, Monopolistic Competition, Market Equilibrium, Market contestability, Pazan and Rosse (PR model)

scholarly journals Banking Competition Measurement and Banking Sector Performance: Analysis of 4 ASEAN Countries

2017 ◽  
Vol 6 (1) ◽  
pp. 1-28
Author(s):  
Buddi Wibowo
Keyword(s):  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Competition ◽  
Banking Efficiency ◽  
Lerner Index ◽  
Industry Competition ◽  
Competition Level ◽  
Sector Performance ◽  
Asean Countries ◽  
Low Efficiency

Many believe concentrated  banking industry which is dominated by few  big banks creates lower  competition, high profitability, and low efficiency. The main issue in empirical testing of this hypothesis is how to measure banking competition level. Traditional measures of competition are  concentration ratio and Herfindahl-Hirschman Index. This study uses three measures of banking level competition which are widely used in recent  financial literature: Boone Indicator, Lerner Index and H-Panzar-Rosse  statistics.  Lerner Index and H-Panzar-Rosse statistics resulted a similar competition level conclusion, while Boone Indicator produced slightly different output. Industry concentration produced opposing results with those three level of industry competition measurement methods. The results show  banking competition tend to be a monopolistic competition in ASEAN countries, especially in Indonesia which banks’ strategy basically were non-pricing strategy. Competition significantly caused lower profitability, while banking efficiency was not significantly affected by level of competition.DOI:  10.15408/sjie.v6i1.4547

COMPETITION-STABILITY RELATIONSHIP IN DUAL BANKING SYSTEMS: EVIDENCE FROM EFFICIENCY-ADJUSTED MARKET POWER

2021 ◽  
pp. 1-24
Author(s):  
MUDEER AHMED KHATTAK ◽  
OMAR ALAEDDIN ◽  
MOUTAZ ABOJEIB
Keyword(s):  
Market Power ◽  
Financial Stability ◽  
Banking Sector ◽  
Market Competition ◽  
Policy Implications ◽  
Islamic Banks ◽  
Banking Competition ◽  
Precise Measure ◽  
Conventional Banks ◽  
The Impact

This research attempts to explore the impact of banking competition on financial stability employing a more precise measure of market power. It was found that Islamic banks are less stable and are enjoying lower market power. The analysis shows that higher market competition makes the banking sector vulnerable to defaults, supporting the “competition-fragility view”. This research finds no difference in the relationship for Islamic banks indicates that Islamic banks might be involved in traditional banking activities as conventional banks. The results are consistent and robust to different estimation approaches and subsamples. This research carries regulatory and policy implications.

scholarly journals Relationship between competition and efficiency in the Czech banking industry

2013 ◽  
Vol 61 (7) ◽  
pp. 2701-2707 ◽  
Author(s):  
Iveta Řepková ◽  
Daniel Stavárek
Keyword(s):  
Positive Relationship ◽  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
Empirical Literature ◽  
Data Envelopment ◽  
Reverse Effect ◽  
Banking Competition ◽  
Johansen Cointegration Test ◽  
The Relationship

The aim of the paper is to estimate the relationship between competition and efficiency in the Czech banking industry in the period 2001–2010. The theoretical definition and literature review of the relationship between banking competition and efficiency is included. Lerner index and Data Envelopment Analysis were used to estimate the degree of competition and efficiency in the Czech banking sector. The market structure of the Czech banking industry was estimated as a monopolistic competition and it was found a slight increase in the competition in the banking sector. The efficiency of the Czech banks increased in the analysed period. Using a Johansen cointegration test, the paper contributes to the empirical literature, testing not only the causality running from competition to efficiency, but also the reverse effect running from efficiency to competition. The positive relationship between competition and efficiency was estimated in the Czech banking sector. These findings are in line with the Quiet Life Hypothesis and the suggestions that the increase of the competition will contribute to efficiency.

scholarly journals The Degree of Competition in the UAE Banking Industry

2017 ◽  
Vol 4 (2) ◽  
pp. 1
Author(s):  
George Owusu Antwi ◽  
Rachna Banerjee ◽  
Amal Abeer Mohammed ◽  
Mariam Juma Muna-Habib
Keyword(s):  
Market Structure ◽  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
Balance Sheet ◽  
Competitive Environment ◽  
Input Price ◽  
Financial Products ◽  
Long Run ◽  
Banking Market

This paper has made an attempt to assess the degree of competition (or market structure) in the UAE banking sector using the H-statistics established by Panzar-Rosse (1987). Data of six years (2009-2015) have been extracted from various balance sheet and income statements of the banks. Pooled OSL estimator was used to obtain the coefficient. The inputs prices were found to be significant except the input price of labor. Total asset was registered to be positively significant. All other variables were not significant. The results of the study reveal that the UAE banking market structure is characterized by the monopolistic competition. That is, banks earned their revenue as if operating under conditions of monopolistic competition during this period. A robust check was performed to test for validity of PR-model. The results yield E-statistic which is consistent with long-run equilibrium. It is believed that both the small and the larger banks operate relatively equal more in a competitive environment. We recommend that UAE should develop new financial products and services that will provide convenience to customers while improving profitability.

scholarly journals Banking Competition and Efficiency in Jordan: A Note

2012 ◽  
Author(s):  
Khaldoun Al-Qaisi
Keyword(s):  
Financial Stability ◽  
Banking Sector ◽  
Banking Industry ◽  
Competitive Behavior ◽  
Policy Recommendations ◽  
Competitive Condition ◽  
Research Papers ◽  
Banking Competition ◽  
Structural Test ◽  
Over Time

The financial economics literature contains numerous research papers which examine issues that concern the banking industry. One of these issues is banking competition. Indeed, this issue is important because of its complications to financial stability and the growth of the borrowing firms. The purpose of this paper is to assess the competitive behavior of the Jordanian banking sector during the period ranging from 1999 to 2008 using the non-structural test developed by Panzar and Rosse. In more specific terms, this paper examines the overall competitive condition during the period 1999 – 2008 and how it has evolved over time. Based on the empirical findings, it is expected that a number of policy recommendations may be provided. The objective of these recommendations is to enhance the regulation of the banking sector in Jordan and improve their performance.  

scholarly journals Essence of Competitiveness in the Banking Sector: The Status and Problems

2020 ◽  
Vol 11 (514) ◽  
pp. 324-330
Author(s):  
I. M. Viadrova ◽  
◽  
M. V. Morozov ◽  
Keyword(s):  
Banking Sector ◽  
Significant Proportion ◽  
Banking System ◽  
Competitive Environment ◽  
Banking Competition ◽  
Banking Market ◽  
The Status ◽  
Net Assets ◽  
Foreign Credit ◽  
Competitive Products

The article is aimed at closer defining the content of the concept of «bank competitiveness», as well as analyzing the status and problems of ensuring a competitive environment in the banking system of Ukraine. The essence of banking competition was researched and a critical analysis of approaches to understanding the concept of «bank competitiveness» was carried out. Under the concept of «bank competitiveness», it is proposed to understand the integral characterization, which will reflect the real and potential opportunities of the bank to create and promote competitive products and services that meet all customer requirements, occupy and maintain stable positions in the banking market. The analysis of the competitive environment in the banking sector of Ukraine was carried out. The distribution of net assets of banks by groups: State-owned, foreign, private and separately PrivatBank is also analyzed. The assessment of the level of concentration in the banking sector was carried out by calculating the Herfindahl-Hirschmann Index by the level of total and net assets, as well as by the market of deposits of individuals. According to the identified dynamics, an unambiguous conclusion was made that the banking sector of Ukraine is low-concentrated. In general, the analysis of the competitive environment showed positive tendencies and an increase in the competitiveness of banks. The problems that continue to adversely affect the level of competitiveness of banks are allocated as follows: significant proportion of the State-owned banks; problems in lending to big business, as well as the generally low level of capitalization of Ukrainian banks compared to foreign credit institutions; the insufficient number of products and services offered by banks compared to foreign banking markets.

scholarly journals Performance Efficiency of Engineering Industries in India

2020 ◽  
Vol 1 (2) ◽  
pp. 44-53
Author(s):  
Balamurugan Muthuraman
Keyword(s):  
Banking Sector ◽  
Research Work ◽  
Poor Performance ◽  
Engineering Industry ◽  
Policy Implications ◽  
Foreign Banks ◽  
Financial Statement ◽  
Financial Growth ◽  
Reducing Costs ◽  
Engineering Industries

Purpose of the study: To critically analyze the financial growth pattern and the overall performance efficiency of industrial machinery companies in India. Design/Methodology/Approach: The data collected from the financial statement of the companies for 10 years from 2007-2008 to 2016-17 were analyzed with the help of different accounting and statistical tools. Discriminant analysis has been adopted for analyzing and interpreting the quantitative data was carried out using SPSS. Findings: The study revealed that good performance efficiency of the engineering industry over the period 2007-2017, most Indian engineering industries exist with high net profit. The poor performance companies need of the hour to increase profit by reducing costs. Practical Implications: The study has interesting policy implications. It is recommended to encourage foreign banks' presence to enhance the competitive condition of the banking sector thus making sure the exit and entrance of banks in the industry raise the competition. The pursuit of modernization, in fully hardening the resources of information technology should be relentless. It is a field that demands great attention and expertise. Originality/value: This research work is one of its first kind as no study was conducted before focusing on the performance perspectives of the engineering industries in India. Keywords: Financial Performance, Engineering industries in India, Financial statement analysis, Modernization, Discriminate Analysis

scholarly journals FOREIGN CAPITAL AND CREDIT MARKET DEVELOPMENT: THE CASE OF LITHUANIA

2005 ◽  
Vol 6 (4) ◽  
pp. 219-224 ◽  
Author(s):  
Aleksandras Vytautas Rutkauskas ◽  
Gitana Dudzevičiūte
Keyword(s):  
Interest Rates ◽  
Open Economy ◽  
Banking Sector ◽  
Foreign Capital ◽  
Credit Market ◽  
Foreign Banks ◽  
Market Development ◽  
Loan Portfolio ◽  
Banking Competition ◽  
Positive Effects

There have been wide-ranging discussions on whether the investments of foreign banks into the banking sector of the Central and Eastern Europe countries (CEE) lead to greater competition and increase of the loan portfolio of the banks. Several empirical works have shown that a high proportion of foreign capital in the banking sector of CEE countries has generally positive effects on the quality and amount of loan portfolio of the banking sector, but there may also be some adverse effects. Lithuania has an open economy and the credit market is open to international banking competition. The loan portfolio of the banks in Lithuania was growing very rapidly during the last year. A drop in the loan interest rates was significant and banks offered credits under favourable conditions. At the same time, the Lithuanian banking sector is largely foreign‐owned. Foreign investors currently own approx. 87 % of the share capital of banks in Lithuania. The aim of this paper is to investigate the link between the Lithuanian credit market development and the entry of foreign banks

scholarly journals Estimation of the competitive conditions in the Czech banking sector

2011 ◽  
Vol 59 (2) ◽  
pp. 299-306 ◽  
Author(s):  
Daniel Stavárek ◽  
Iveta Řepková
Keyword(s):  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
Necessary Condition ◽  
Banking Competition ◽  
The Czech Republic ◽  
Full Sample ◽  
Empirical Industrial Organization ◽  
Banking Market ◽  
Competition Level

The paper uses New Empirical Industrial Organization approach, especially Panzar-Rosse model to estimates the level of competition of the banking industry in the Czech Republic during the period 2001–2009. We apply Panzar-Rosse model to estimate H statistic for a panel of 15 banks, which represent almost 90 % of the market. This paper also measures and compares the degree of banking competition in two sub-periods, 2001–2005 and 2005–2009, in order to investigate development of the competitive structure of the Czech banking industry. We found that the market was in equilibrium during most of the estimation period, which is a necessary condition for sound evaluation of the competition level. While the market can be described as perfectly competitive in 2001–2005, the intensity of competition decreased after joining the EU in 2004 and the market can be characterized as one of monopolistic competition in 2005–2009. The monopolistic competition in the Czech banking market was also revealed if the full sample 2001–2009 is considered.

scholarly journals Competition and Concentration in Bangladeshi Banking Sector

2016 ◽  
Vol 5 (1) ◽  
pp. 16-29
Author(s):  
Anwar Hossain Repon ◽  
Zahidul Islam
Keyword(s):  
Market Structure ◽  
Concentration Ratio ◽  
Banking Sector ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
Market Concentration ◽  
Sample Period ◽  
Banking Competition ◽  
The Past ◽  
Bank Concentration

The purpose of this paper is to investigate the market structure and degree of concentration of Bangladeshi banking industry. The study measured market concentration by using widely recognized measures like k-bank concentration ratio and Herfindahl-Hirchman Index (HHI). It evaluates market structure by applying Panzar-Rosse Model over 8 years period from 2006 to 2013. The result of concentration measures indicates a decreasing trend and low level of market concentration in Bangladeshi banking industry over the sample period. The panzer-Rosse “H-Statistic” suggests that banks in Bangladesh are operating under monopolistic competition. Present paper contributes to a burgeoning literature on banking competition that has evolved significantly over the past periods on a developing country perspective like Bangladesh.

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