Competitive conditions in Islamic and conventional banking – A global perspective – Rima Turk Ariss

Competitive conditions in Islamic and conventional banking – A global perspective – Rima Turk Ariss

EM Strasbourg Bussiness School
(Université de Strasbourg)
with
European Research Group
“Money, Banking & Finance”
Financial and Monetary European Integration Group
Workshop on Islamic Finance
in Strasbourg
What Islamic Finance does (not) change
March 17th,, 2010,, EM Strasbourg Business School

 Abstract:

 I analyze the competitive conditions prevailing in Islamic and conventional global banking markets, and investigate the possible differences in profitability between these markets, using a sample of banks across 13 countries during 2000–2006. The results suggest that Islamic banks allocate a greater share of their assets to financing activities compared to conventional banks, and they are also better capitalized. Different computed measures of competition indicate that Islamic banking is less competitive compared to conventional banking. A second-stage analysis shows that profitability significantly increases with market power, but this does not warrant higher profitability levels for Islamic banks. JEL Classification Numbers: D4; G21; L1; N25

Keywords: Market Structure; Bank Competition; Panzar and Rosse method; Lerner Index; Islamic banks

source: http://www.em-strasbourg.eu/ems/ems-workshop-on-islamic-finance-33.html