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The financial competition, concentration and structure of financial performance nexus in the financial sector of Oman

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  • Faris Alshubiri

    (Dhofar University)

Abstract

This study aimed to measure the impact of financial competition, as measured by the Lerner index (LRI) and the Panzar-Rosse model (PRM), and concentration, as measured by the Herfindahl–Hirschman index (HHI), on structure of financial performance indicators in 24 firms in the financial sector of Oman for the period of 2008–2018. The main findings were consistent and confirmed by estimated generalised least squares (EGLS), feasible generalised least squares (FGLS) and dynamic and system generalised method of moments (GMM) estimators. Regarding financial competition, the LRI had a significant negative impact on all of the structure of financial performance indicators. In addition, the PRM had a significant positive impact on all of the structure of financial performance indicators except liquidity and leverage. Regarding concentration, the HHI had a significant positive impact on all of the structure of financial performance indicators except liquidity and profitability. The study implications can help decision makers develop a regulatory framework for banks/firms that enables the adoption of a mixed perspective that focuses on an incentive-compatible environment in the financial sector and tries to fine-tune the market concentration and the degree of competition.

Suggested Citation

  • Faris Alshubiri, 2022. "The financial competition, concentration and structure of financial performance nexus in the financial sector of Oman," Economic Change and Restructuring, Springer, vol. 55(2), pages 681-714, May.
    • Handle: RePEc:kap:ecopln:v:55:y:2022:i:2:d:10.1007_s10644-021-09326-8
    DOI: 10.1007/s10644-021-09326-8
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    More about this item

    Keywords

    Herfindahl–Hirschman index; Lerner index; Panzar-Rosse index; Structure of financial performance; Financial sector; Economic theory;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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