Market Structure, Performance, and Efficiency of the MENA Banking Sector
Publication Type
Conference abstract/paper published in a peer review journal

The Middle East North Africa (MENA) banking system has experienced significant developments in recent years. This is related mainly to deregulation of financial services, which lead to a debate on whether competition can improve the performance and efficiency of the banks. This paper tests four hypotheses that have been proposed in the literature on the relationship between market structure, profitability, and efficiency using stochastic frontier analysis with a panel data of the 201 banks in MENA countries during the period of 2005–2012. The empirical results show clearly that neither the structure conduct performance nor the efficient structure hypotheses hold in MENA countries. Our evidence goes with the relative market power hypothesis that suggests that banks higher market share are able to exercise their market power to obtain higher profits by setting higher prices. Furthermore, Cost efficiency has a significant effect upon bank profitability and the policy makers should adopt policies that promote further competition in the MENA banking sector.

International EuroConference of Emerging Market Economies, June 29 - July 1, the School of Economics and Management of the University of Porto (FEP), and the Center for Economics and Finance at University of Porto (CEF.UP), Porto, Portugal.
International EuroConference of Emerging Market Economies
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Publication Type
Online only