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Market size and market structure in banking

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  • Alfaihani, Sara
  • Badunenko, Oleg
  • Jaffry, Shabbar

Abstract

Larger markets are usually characterised by a large number of firms. We show this does not hold in banking. Our analysis of banking in Gulf countries suggests the existence of a lower bound to concentration.The bounds are different across countries, however, in all of them, the markets remain concentrated regardless of the market size. We also show that the largest banks are becoming more dominant over time. Most importantly, the values of the limiting levels and the actual levels of concentration are astonishingly close suggesting that the banking markets of the Gulf countries are operating close to long-run equilibrium.

Suggested Citation

  • Alfaihani, Sara & Badunenko, Oleg & Jaffry, Shabbar, 2021. "Market size and market structure in banking," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:intfin:v:72:y:2021:i:c:s1042443121000615
    DOI: 10.1016/j.intfin.2021.101342
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    Cited by:

    1. Xinhai Lu & Mingxu Bai & Bing Kuang & Danling Chen, 2021. "Unlocking the Relationship between Land Finance and Regional Integration," Land, MDPI, vol. 10(9), pages 1-17, August.

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    More about this item

    Keywords

    Banking; Market Structure; Market Size; Concentration; GCC; Stochastic Frontier;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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