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Concentration and Competition in Dual Banking Industry: A Structural Approach

Author

Listed:
  • Mohammed, Nafisah

    (Pusat Pengajian Ekonomi, Fakulti Ekonomi dan Pengurusan, Universiti Kebangsaan Malaysia, 43600 Bangi, Selangor, MALAYSIA.)

  • ismail, abdul

    (Islamic Research and Training Institute, Islamic Development Bank, P.O. Box 9201, Jeddah 21413, KINGDOM OF SAUDI ARABIA.)

  • Muhammad, Junaina

    (Jabatan Perakaunan dan Kewangan, Fakulti Ekonomi dan Pengurusan, Universiti Putra Malaysia, 43400 Serdang, Selangor. MALAYSIA.)

Abstract

The purpose of this paper is to investigate the evolution of market concentration and competition in Malaysian dual banking industry for the period of 1997-2013. This study utilized structural approach to investigate changes in the market structure particularly the level of concentration and competition that contributed by several structural changes which take place in the dual banking system. According to structural approach, concentration plays an important role in examining the link between concentration and competition. Therefore, present paper utilized the structural approach to measure various concentration indexes to provide significant evidence on the changes in the market structure of Malaysian banking industry for the largest available data set of 1997-2013. Pearson correlation analysis was also used to examine the consistency of those various measures used in this study. The paper found evidence that structural changes have altered the market structure of the banking industry which comprises of Islamic and conventional banking system. The results also indicate that dual banking industry operates in the monopolistic competition structure. Therefore, concentration indexes can be used by authorities to decide on the optimal number of banks operating in the industry.

Suggested Citation

  • Mohammed, Nafisah & ismail, abdul & Muhammad, Junaina, 2016. "Concentration and Competition in Dual Banking Industry: A Structural Approach," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 50(2), pages 49-70.
    • Handle: RePEc:ukm:jlekon:v:50:y:2016:i:2:p:49-70
    DOI: http://dx.doi.org/10.17576/JEM-2016-5002-05
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    References listed on IDEAS

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    Cited by:

    1. Mohammed, Nafisah & Muhammad, Junaina & ismail, abdul, 2018. "The Degree of Competition in the Malaysian Dual Banking Industry," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(3), pages 71-89.
    2. Mohammed, Nafisah & Muhammad, Junaina & ismail, abdul & Jauhari, Azmafazilah Binti, 2019. "Does Efficiency Matter for Competition? A Case of Dual Banking Industry," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 53(3), pages 163-177.
    3. Nur Afizah Muhamad Arifin & Roslina Mohamad Shafi & Imani Mokhtar, 2023. "Does Competition Matter in The Malaysian Banking System?," Information Management and Business Review, AMH International, vol. 15(3), pages 78-84.

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